U.S. Banks Taking ‘Cautious’ Approach to Timing Broad EMV Issuance (March 11, 2013)
March 11, 2013
Many U.S. banks are taking a cautious approach in making any plans to broadly issue EMV cards to consumers prior to October 2015, when the card networks’ liability-shift deadlines take effect, as they weigh the cost of the migration against the risks of doing nothing, several banking executives said today during a panel at BAI Payments Connect in Phoenix. “Not all of us have got our toe in the water but all of us have our socks off,” said Richard Parry, a risk management executive with JPMorgan Chase & Co., explaining that Chase so far is converting only “certain customer segments” to EMV, such as frequent travelers, and the bank is taking a “cautious” approach about making specific plans for issuing EMV cards to all customers. EMV, which most major markets around the world have already embraced, helps to block counterfeit card fraud at the point of sale because the dynamic data in chips prevents replication of stolen card data. But building a business case for the “huge” cost of EMV conversion is tough for many banks, Parry said.
Many issuers may wait until the fall of 2015 to adopt EMV on a broad basis, suggested Stephanie Ericksen, head of authentication product integration for Visa Inc. “Timing [broad EMV] card issuance around the liability shift gives you the greatest [economic] benefit,” she said. “We don’t see that 100 percent of cards will be chip-enabled by 2015,” she added, noting that each issuer and merchant will have different factors to consider in deciding when and where to implement EMV. “It will depend on your situation—what’s your issuance footprint? Do you have a lot of cross-border activity?” Ericksen asked. Merchants with a high proportion of “inbound foreign card transactions” may have a greater need than others to adopt EMV sooner rather than later, she suggested.
One group that hopes to buy more time before immediately adopting EMV is the U.S. ATM industry. The ATMIA, an ATM trade association based in Sioux Falls, S.D., on March 8 issued an open letter urging all global payment networks to standardize the liability-shift deadlines for U.S. cross-border ATM transactions. MasterCard has set a deadline of April 19, 2013, when ATM owners and operators will be responsible for counterfeit card fraud on Maestro transactions, but David Tente, the group’s executive director, said that deadline is “not achievable.” Visa’s EMV liability shift deadline for U.S. ATMs is Oct. 1, 2017. The National ATM Council, a Jacksonville, Fla.-based ATM organization, on Feb. 14 issued a letter asking for industry alignment on the ATM liability shift.
