Oberthur Technologies of America Corp. is in talks with U.S. issuers planning to migrate their debit and credit card portfolios to EMV chip-and-PIN technology “over the next couple of quarters,” an executive for the card manufacturer tells PaymentsSource.
The prospective issuers would join two other U.S. institutions that have committed to issuing EMV-capable payment cards for their customers’ convenience when traveling abroad, where EMV is becoming the dominant fraud-prevention smart card standard (
“We are talking to a number of issuers who see the marketing advantage of being among the first to adopt EMV in the U.S., which they see as an inevitable direction for the overall U.S. environment,” says Garfield Smith, vice president of marketing for the Chantilly, Va.-based U.S. division of France-based Oberthur.
U.S. card issuers that add EMV technology retain the magnetic stripe so cards may continue to function at payment terminals not equipped to process EMV transactions, he notes.
Smaller U.S. institutions so far are the first to embrace EMV, but “issuers of all sizes, with both Visa and MasterCard brands, also are interested in it,” Smith says. “Issuers like the idea of being first and align their products with where the market is going.”
EMV chip-and-PIN technology, which most major countries outside the U.S. have adopted in recent years, typically adds a layer of fraud protection by requiring cardholders to enter a PIN to authenticate the transaction by verifying data stored in the microchip.
U.S. cardholders with EMV cards will find it easier to conduct transactions when traveling abroad, but their cards will continue to be subject to risk from card-skimming schemes, in which crooks use hand-held devices to grab card data off of mag-stripes and use the information to create counterfeit cards.
“The U.S. is flanked by Canada and Mexico, which are adopting EMV technology. And since fraud always goes first to the weakest link, a number of issuers are concerned about the potential rise in card fraud, and they want to get out there ahead of others in preventing it,” Smith says.
No mandate exists requiring U.S. issuers and merchants to adopt EMV technology, an effort whose costs could reach $5 billion to $13 billion.
But a spike in U.S. card-skimming fraud could provide the catalyst needed for the U.S. market to embrace EMV, observers say.
“If fraud increases further in the U.S. and criminals take advantage of the country as a softer target than the EMV-enabled rest of the world, a U.S. move to EMV may become more likely,” Steve Brunswick, director of product security at Thales e-Security Inc., said in a blog published this month.
The domestic market is on the “verge” of chip-and-PIN adoption, and patchwork approaches may emerge before there is a broad mandate to do so, the Smart Card Alliance in February said in a research paper examining the opportunities and costs of the U.S. adopting EMV technology (
Both the alliance and Oberthur stand to benefit from a U.S. migration to EMV.
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