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Chip Cards Remain An Expensive Choice

Wednesday, May 15, 2013 - 7:15 AM
Apparently the business case for adopting EMV (Eurocard, MasterCard and Visa), the recognized international standard for smart chips included on payment cards, is weak.   However, there is some regulatory incentive which becomes effective October 2015 which raises the visibility of the issue and the urgency of a decision.

From Credit Union Times:
“We are definitely at the beginning of a technology shift in payments,” Patricia Hewitt, director of debit services for the Mercator Advisory Services told a conference meeting specifically set aside for credit union CEOs. But the market has not picked a winner among the new technologies, and until it does, it will be hard for financial institutions to know how to move forward, she said. It will also be difficult to tell which nonfinancial institution innovators will succeed and which will fail, she added.

... Absent a mandate from a government or from the major card brands, there is no strong case for paying the additional costs for EMV cards, at least not for an entire card portfolio. The cards will significantly cut the cost of one type of fraud–counterfeit card fraud–but not necessarily others. 

Cards enabled with EMV chips can cost between two and four dollars more per card than cards with magnetic stripes.

Institutions will face liability for card fraud after October 2015, and that has provided both card issuers and merchants a strong incentive to adapt to the new technology. After October 2015, it will be the party on either side of a transaction which is not yet enabled EMV technology, whether merchant or retailer, that will bear the responsibility for card losses that would have otherwise been prevented had the new technology been in place.

 

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