Gemalto NV has introduced a duel-interface payment card with both an EMV chip and a magnetic stripe for U.S. banks and other card issuers, according to the France-based card vendor. The card manufacturer hopes the product helps relieve difficulties consumers may experience when transacting with mag-stripe cards in nations that have converted to chip-and-PIN payment technology.
“With the rest of the world moving to EMV smart payment cards, U.S. travelers often face problems when trying to use their magnetic stripe cards where there are only chip card point-of-sale machines and no cashiers or attendants on duty,” such as at payment kiosks for train tickets or for parking, tolls or gasoline, says Jack Jania, vice president and general manager of secure transactions for Gemalto North America.
U.S. consumers also sometimes can experience difficulty using their mag-stripe cards at the point of sale overseas, says Nick Holland, a senior analyst at Boston-based consulting firm Aite Group LLC. Some merchants with EMV technology refuse to take mag-stripe cards because of fraud concerns, he notes.
Additionally, it is “becoming an unfamiliar technology” in some areas, says Holland. “If you go to rural France, it is quite possible they have not swiped a card in years,” he says.
When the cards become available to consumers is up to the issuing banks, says Jania, who declined to speculate how many issuers might offer the cards. The cards can be credit or debit, and the issuing banks decide whether consumers must open a new account to receive a card or whether they can add the card to an existing account, he says.
Because the cards include both a mag-stripe and an EMV chip, consumers may use them in the United States and abroad.
The price to issuers varies on the technology features of the card and how many additional services Gemalto provides to them, such as technical support and worldwide emergency card replacement options, says Jania, declining to reveal specific costs.
Issuers likely will pay roughly $1 more per card to issue EMV cards, estimates Holland, noting they either may offer the card to specific clients with high rates of travel expenses in their portfolios or provide them at customers’ request.
“The vast majority of U.S. cardholders would not require this at all,” he says.
Overall, though, Gemalto’s program is “very timely,” says Holland. “The market is probably right for this,” he says. “The U.S. will be the last developed country within two years that does not have some form of chip-based architecture.”
Gemalto is “optimistic” U.S. issuers will see the benefits of EMV technology, says Jania.
Many U.S. issuers and merchants, however, are resistant to chip-and-PIN because of the high costs related to it, notes Paul Martaus, president of the Mountain Home, Ark.-based consulting firm Martaus & Associates Inc.
“The cards themselves are expensive, and we’ve got millions of retailers out there” without point-of-sale terminals that can accept EMV payments, says Martaus. “That’s billions of dollars worth of devices” that need updating, he says.
Holland estimates the U.S. costs at $12 billion to move away from mag-stripe cards. “Card issuers would be paying an extra $1 per card, but the merchants would bear the brunt of costs,” he says.
