The time for a chip card game plan is now.
By Michelle Thornton
Last Thursday--International Credit Union Day 2014--offered an opportunity to reflect on the growth of the credit union movement globally. One area of CU global growth–EMV adoption in the United States—is finally underway in earnest. Credit unions will be able to better serve their members here at home through the enhanced fraud protection of the chip card standard. And, it will be easier for members to use their credit union-issued credit and debit cards when they travel abroad once they are EMV enabled. Both data breaches and the upcoming Oct. 1, 2015, U.S. liability shift (to the party in the transaction that did not enable the chip card), has elevated EMV adoption from conceptual to imminent. EMV provides strong transaction security features in card-present transactions that are not possible with traditional magnetic stripe cards. Fraud statistics in Canada post-EMV adoption are telling. For example, in 2009, Canada’s Interac debit fraud loss was $142 million. Since deploying EMV technology, that number dropped to $70 million in 2011. Approximately 70 million international trips are made each year by Americans. As more countries have migrated to EMV chip card technology, U.S. magnetic stripe cardholders have encountered acceptance issues when traveling abroad. Although the vast majority of point-of-sale terminals worldwide will accept magnetic stripe payment cards, unmanned terminals and kiosks that require an EMV chip card remain. Plus, some merchants are not familiar with how to process a magnetic stripe card, leading to the impression that a magnetic stripe card cannot be used. These issues were among the reasons that United Nations Federal Credit Union became the first U.S. EMV adopter. And while the credit union’s international member base makes EMV a logical choice, the success rate is a positive indicator for other CUs. With 100,000 members and $3.7 billion in assets, United Nations FCU’s beta rollout went to 8,000 member accounts enrolled in a frequent flyer card program. As of June 2012, the CU had roughly 40,000 credit card accounts worth more than $130 million. While credit unions aren’t required to act immediately, the time to formulate an adoption strategy is now. Building a solid business case and accurately assessing costs is critical to determining the right time for EMV adoption. Profitable implementation of EMV chip cards will depend on many elements, not just fraud reduction and the added benefit to members traveling internationally. One way to help determine costs and timing is to use the “EMV Budget Tool” available at CO-OP Financial Services’ EMV Resource Center. Still, as we continue to celebrate the credit union movement, we have the added bonus of looking forward to a much bigger credit and debit card world as we embrace and implement EMV in the months and years ahead.
Michelle Thornton is manager/core products with CO-OP Financial Services, Rancho Cucamonga, Calif. She can be reached at 800.782.9042, ext. 6162. Also read "Seven Leading Questions (and Answers) About EMV Implementation."
