NEW ORLEANS — U.S. issuers are considering issuing cards that adhere to the EMV Integrated Circuit Card Specifications to customers who frequently travel abroad, according to payment executives.
The EMV security format, formerly known as the Europay, MasterCard, Visa standard, is widely used outside the United States, but U.S. financial companies have resisted the technology, because it requires a significant change to the payment infrastructure. EMV cards have embedded chips, and users must enter a PIN at the point of sale to initiate transactions.
Jack Jania, a vice president with the Dutch card maker Gemalto NV and its general manager for secure transactions, said merchants in countries that have implemented the EMV format, especially small merchants, sometimes refuse to accept the traditional magnetic-stripe cards carried by U.S. travelers.
"We expect to see those problems continue" despite contracts that require merchants to honor U.S. consumers' magnetic-stripe cards, Jania said during the CTST conference, which was organized by American Banker's parent company, SourceMedia Inc.
"Two or three years ago you could not have EMV discussions with issuers" in the United States, Jania said. "That has changed. Dialogue is taking place at a serious level now."
Distributing such cards to people who travel often to Europe would help issuers maintain a "top-of-wallet" position with their customers, he said.
Except for the United States and much of Africa, countries around the world have implemented the EMV format or in the process of doing so.
The format is particularly entrenched in Western Europe, where it has been credited with reducing fraud losses from card counterfeiting, especially in the United Kingdom.
"Are we at a tipping point" for the format in the United States, said Deb Baxley, the managing principal of KeyPoint Consulting, a San Antonio research company. "I'm not sure. But we might be closer than we think."
The EMV format is already being used in Mexico, and it is being tested in Canada. Visa Inc., MasterCard Inc. and Canadian debit companies have said they expect the country to shift completely to the format in the next few years, and some merchants have already installed the technology.
Canadian Tire Corp. Ltd., for example, has already deployed about 5,000 EMV terminals in its stores, according to Oliver Manahan, vice president for advanced payments with MasterCard's Canadian unit.
Security experts say that the lack of EMV in the United States could attract criminals who have found it harder to pull off scams in countries where the format is already commonplace.
"Fraud is going to migrate to the U.S. one of these days, big time," said Rene Bastien, the payment products manager for Safenet Inc., a Belcamp, Md., security vendor.
Guy Berg, the president of Collis America, pointed out another possible source of momentum for the EMV format in the United States: the growing acceptance of contactless payment cards, which use the same chips as EMV cards.
If contactless cards, which use near-field communication technology, become more common in the United States, they could help boost the case for the security standard, Berg said, because "NFC in the U.S. probably will be an EMV application."
As a first step, he said, the United States could embrace a "partial" EMV format — a version of the standard that reduces the back-end support needed to authenticate transactions at payment terminals.
Terminal vendors, who must sell their equipment throughout the world, could easily install EMV applications in their products, Berg said. "Basically, the terminal industry is ready to go."
None of the executives at the conference would offer a timetable on when U.S. issuers would move forward.
"Will it be 2010 or 2015? I'm not sure," said Martin Ferenczi, managing director of the Americas in the card systems division for the French smart card vendor Oberthur Technologies. "I'm not ready to announce yet that the U.S. is moving to EMV."
