BMO Does the Time Warp with Its U.S. Card Business

Canada is well ahead of the U.S. in its adoption of the EMV chip-card standard. That places BMO's Kevin Tait in a bit of a time warp, since a large part of BMO's corporate payments operations are in the U.S.

"U.S. business is about half of the business we do, so we're very aware of the migration issues in the U.S.," says Tait, senior manager of payment strategy and emerging products for BMO Spend & Payment Solutions at BMO Financial Group.

While it waits on the U.S. migration play out, BMO has issued EMV cards for corporate clients and business travelers who move between the U.S. and Canada. And like other financial institutions, it issues chip cards to U.S. users who travel abroad, as well as certain other niche audiences. BMO is currently expanding the breadth of U.S. issuers it targets for corporate and other card products that are EMV compliant.

"In Canada, corporate cards have been moved to chip and PIN for a couple of years for the most part, and that becomes important for card users in the U.S.—many of whom travel to Canada," Tait says.

BMO's EMV-compliant cards also have magnetic stripes, so they work at most point of sale terminals in the U.S. But some differences create complications on the U.S. side. 

"The challenge we find is the management of the PIN," Tait says. "In Canada or, for that matter, any area that's mov[ing] to chip it's easy to change your PIN at any ATM machines. In the U.S., changing the PIN is problematic at this point in time." 

U.S. issuers must take PIN management into consideration if they plan to offer EMV cards as chip-and-PIN cards instead of chip-and-signature cards, says Julie Conroy, a research director at Aite Group.

"Incidentally, of the interviews I've had for the EMV research thus far, the majority of the financial institutions I've spoken with are going to be deploying chip-and-signature for their credit card portfolios," Conroy says. "There are a few issuers that are going chip-and-PIN, but they appear to be in the minority at this point."

If U.S. card users forget or need to change their PIN, they must obtain a new PIN from BMO, which is mailed to the user.

There are workarounds for full ATM upgrades for chip and PIN, such as mobile cash management, says Richard Crone, a payments consultant. Combined with security measures such as device fingerprinting and the eventual growth of contactless mobile payments, mobility could eventually render expensive choices regarding EMV compliant hardware moot, Crone says.

"EMV is where the truck was. Mobile is where it's going," he says.

Mobile payments for corporate use are on BMO's radar, but demand is low, Tait says.

"NFC is not built into a lot of the devices right now," Tait says. "There have been rumors regarding Samsung, that the next Galaxy phones will have NFC. But the hardware really isn't there."