EMV Conversion Planning: 12 Tips

Get started now, experts tell CUs.

March 1, 2013

It’s a point of pride for the U.S. to operate differently than the rest of the world on many fronts—still waiting for that metric revolution, are you?

But the adoption of EMV card technology is inevitable, and it’s going to happen quickly.

EMV (Euro MasterCard/Visa) is a global standard for credit and debit payment cards based on chip card technology, according to CO-OP Financial Services, which offers an "Ask the Expert" portal for all things EMV-related.

As of Q3 2011, there were more than 1.34 billion EMV compliant chip-based payment cards in use worldwide. EMV chip-based payment cards, also known as smart cards, contain an embedded microprocessor, a type of small computer. The microprocessor chip contains the information needed to use the card for payment and is protected by various security features. Chip cards are a more secure alternative to traditional magnetic stripe payment cards.

According to a time line announced by Visa and MasterCard, the magnetic stripe version of credit, debit, and prepaid cards will be antiquated by 2017, thanks to a shift in counterfeit fraud liability to merchants and financial institutions who decline to service EMV cards.

The dramatic shift to these cards, which carry an embedded microchip, will essentially change every aspect of the plastic card system. Credit unions could bear the cost of swapping out members’ cards and upgrading their ATMs, as well as adapting their data processing systems, fee programs, authorization methods, and fraud tools.

Beyond standardizing worldwide payment systems, EMV technology—which is the standard in western Europe and widely used elsewhere, with more than 1.5 billion cards circulating worldwide—promises to be more resistant to fraud because it uses a dynamic verification value that changes with every transaction.

How should credit unions prepare for this shift? Teri Koenke, vice president of product development at PSCU, and Mansel Guerry, president/CEO of Credit Union 24, offer 12 tips:

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