Pres. Obama Mandates Chip-and-PIN for Gov’t Payments Cards (Oct. 17, 2014)

Written by FinTech Futures
17th October 2014

President Obama on Oct. 17 signed an executive order making chip-and-PIN technology the standard for the federal government’s card-based transactions. The order encompasses all government credit, debit and prepaid cards, including the U.S. Treasury Department’s Direct Express prepaid card, which delivers federal benefits payments including Social Security and SSI. Newly issued government payment cards soon will be equipped with chip-and-PIN technology, and on Jan. 1, 2015, an EMV card-replacement program will begin for existing government payment cards. Every federal agency by the first of next year must have a plan in place to replace existing retail payment card terminals with EMV-compatible hardware. President Obama signed the order after making brief remarks at the CFPB headquarters in Washington, D.C. (Click here to view the video of the President’s remarks.)

The order is targeted at reducing identity theft, according to the President. “Last year, millions of Americans became victims of identity theft,” he said, alluding to data breaches that compromised consumer payments card data. “Identity theft is now one of America’s fastest-growing crimes,” he added.

According to the President, Home Depot, Target, Walgreens and Walmart will roll out chip-and-PIN terminals in their stores by early next year, while American Express has vowed to invest $10 million to upgrade small-business payment terminals. MasterCard is providing its customers with free identity theft monitoring and resolution support, and Visa today announced a broad education campaign for consumers and merchants on chip-and-PIN and other secure payments technologies, the White House said.

President Obama’s move will help accelerate the U.S. migration to EMV, which is already well under way, Randy Vanderhoof, executive director of the Smart Card Alliance, tells Paybefore. “It’s a strong endorsement for government to be siding with the financial industry in requiring that government-issued benefit cards use the same secure chip technology that industry is expecting for its own commercial products,” he says.

Our coverage of EMV adoption has suggested that prepaid portfolios may lag behind credit and debit in the migration to EMV. By signing the order, the President may have changed industry dynamics, and it seems possible that issuers of general purpose prepaid products may accelerate their migration plans.

To buttress industry efforts, the federal government also will create a new BuySecure Initiative, providing education and tools for consumers to cope with identity theft, as well as development of new FTC resources for identity theft victims, the White House said. Later this year President Obama will convene the White House Summit on Cybersecurity and Consumer Protection to promote industry cooperation and innovation to protect the payments industry.

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