While no mandate exists that requires banks to issue EMV chip cards, the debate for the U.S. market adoption of EMV has largely ended. This is due, in large part, to the increasing frequency of large merchant data breaches of stored mag-stripe card data and the subsequent fraud losses that follow them, as well as the approaching fraud liability shift dates set by the various card associations and networks.
Forissuers that are considering issuing EMV chip cards, the implications are significant in terms of the complexities, timing and costs of implementation.
EMV Issuance in the U.S.
EMV chip cards use sophisticated technology that features many different options and configuration profiles. Several of these options were developed to support offline functionality, in which the chip on the card performs various functions that, in the U.S., would be the responsibility of the issuer’s online authentication system to conduct. Without the need to enable offline functionality, EMV deployment from an options and profile perspective narrows fundamentally to one decision: to include contactless interface with each card or not.
EMV CardInterface Options
EMV chip cards are typically deployed in one of two forms: contact only or dual interface. With contact-only cards, the metallic area on the front of the cardis its contact plate. A microprocessor chip is embedded directly behind the contact plate. With an EMV contact transaction, the card is inserted into a card acceptance device (e.g., a payment terminal). The card reader must maintain physical contact with the plate and chip for the duration of the transaction. This connection enables the chip to get power from, and exchange data with, the terminal. This is often referred to as “dip” to pay.
Dual-interface cards include both the contact interface and the contactless interface. Contactless EMV works by holding a contactless chip-enabled card, which also contains an integrated antenna that’s placed in the border of the card, within proximity of a contactless-capable EMV reader. The reader wirelessly powers the chip embedded in the card and allows exchange of data via near field communication, or NFC. This is often referred to as “tap” to pay, because the card never has to leave the customer’s possession.
Contact-only EMV cards are the most common form of EMV implementation, due in large part tocosts with issuing the more expense dual-interface cards and the lack of NFC-enabled terminals.
After your bank’s card program has been upgraded to begin issuing EMV cards, there are several approaches to consider when rolling them out to your existing card base.
One approach is to reissue the entire existing card base at one time. However, this approach results in fairly significant upfront costs, as well as a steeper learning curve for consumers and branch staff alike, which slows the overall experience of working with EMV transaction data.
The generally accepted industry approach is to upgrade your existing card base as cards expire. Spreading the costs out, while both building on EMV experiences and working to educate cardholders on its use, allows banks to take a more systematic, successful approach to EMV migration. Additionally, with this approach, banks can still target specific customer segments that would be inclined toward EMV-enabled cards.
For example, consumers who frequently travel internationally will increasingly be challenged when attempting to use a non-EMV debit card, as most of the rest of the world has already adopted EMV. In order to continue to support these valued clients, the bank can preemptively identify these travelers and reissue/upgrade their existing cards to include EMV chip functionality.
As you weigh the pros and cons on issuing EMV cards, consider not only the operational costs, but also the reputational benefits that may come from customers who recognize EMV as the more secure card option. These customers will likely reach for their EMV-enabled card more often than their non-EMV cards, even if they are using them at terminals not yet equipped for EMV technology.
Derrick Bretz is director of product management for CSI Payment Services, a role in which he leads strategic product development and quality improvement initiatives. Derrick’s work enhances payment and commerce experiences and customer education through the use of data analytics.