JPMorgan Chase & Co. plans to offer a chip-and-PIN card that can be used to make purchases in U.S. dollars in other countries, but the company is not ready to endorse the security format in the United States.
The International Dollar Card, which the New York banking company expects to begin issuing early next year, meets the EMV Integrated Circuit Card Specifications and will be offered to companies with addresses in Europe, the Middle East or Africa. It features an embedded chip, and users enter PINs to authenticate transactions.
Though the United States has resisted moving to EMV, such cards are commonplace in many other countries. Merchants in countries that have adopted the format are supposed to accept U.S. cards, but American travelers have complained of problems using their cards with some retailers.
Alan Koenigsberg, the managing director and head of commercial card and e-invoicing in JPMorgan Chase's international treasury services business, said demand for U.S. dollar chip cards comes from multinational companies, particularly those that operate in regions that might not have advanced payment products using the local currency.
"We see a lot of demand from the same U.S. multinationals [and] for their employees living in the Middle East" or parts of Europe, he said.
Though the card cannot be obtained within the United States, JPMorgan Chase has not ruled out expanding here someday.
"We've talked about it on a number of occasions," he said. "We'll see how this stage of the rollout goes and then we'll come back and reevaluate the product."
Gwenn Bezard, a research director at Aite Group LLC in Boston, said demand also exists among U.S. residents for an EMV card.
"It is becoming increasingly a challenge for U.S. cardholders when they're traveling outside the" country, he said. "Beyond the commercial card context here … , clearly there is a growing challenge in the U.S. as the rest of the world embraces chip-and-PIN."
The JPMorgan Chase card, however, seems to be targeted less at travelers and more at bookkeepers, he said.
"It might be just easier for a company to manage expenses all in U.S. dollars," Bezard said. "I suspect it has more to do with keeping things simple."
However, he said, the card could be a stepping-stone toward an issuer's offering such a card in the United States. Though he was unaware of any issuer doing so today, Bezard said no technological hurdles exist. "If a bank wants to do it, they can," he said.
Even when merchants abroad are willing to accept magnetic-stripe cards from U.S. travelers, technical problems sometimes impede these transactions, Bezard said, and such difficulties would seem to conflict with the marketing message behind most cards.
"You're supposed to be able to use it everywhere, but in fact that's not the case," he said.
Brian Riley, a research director in the bank cards practice at TowerGroup, the independent research firm owned by MasterCard Inc., said JPMorgan Chase's decision not to offer the card in the country of its currency is "an unusual spin" on an international card.
(MasterCard said last week it is selling TowerGroup to Corporate Executive Board Co.)
Riley nevertheless praised JPMorgan Chase's card strategy and said that its card speaks to the needs of U.S. companies that must transact business in countries where EMV has taken off.
If this product succeeds, U.S. issuance would be a natural expansion, he said. "To me, that's where the big enchilada would be."