MADISON, Wis. (9/18/14)--As security breaches such as the one at Home Depot make both consumers and financial institutions more wary of existing fraud prevention technology, credit unions have begun issuing cards equipped with the Europay-MasterCard-Visa (EMV) technology standard to their members.
These cards, which are already common in Canada, Europe and Asia, rely on microchip technology that is more secure than the magnetic strip technology that today's cards employ.
Spokane Teachers CU, Liberty Lake, Wash., with $1.9 billion in assets, has begun offering the more secure chip cards to its credit card holders, the Northwest Credit Union Association (NWCUA) reported (Anthem Sept. 16).
Merchants have to upgrade their systems to read the new cards, and adoption in the United States has been slow. However, credit card networks have set a deadline of Oct. 1, 2015, for merchants to adopt the technology. Merchants who miss the deadline will face increased liability for fraudulent purchases.
"Until merchants upgrade their terminals the new cards won't help protect from these data breaches," said Katie Clark, NWCUA regulatory and compliance analyst. "We'll most likely see the upgrade to the new cards accelerate as we approach next October, when the liability for fraudulent in-person purchases could shift to the merchants."
STCU's updated cards will include both the traditional magnetic strip and the new microchip, so they will work whether or not a merchant has upgraded.
Initially, STCU is issuing the more secure cards to members who often travel internationally, where the cards are standard. By the end of 2015, though, all STCU credit cards will be equipped with EMV technology.
Beginning Oct. 1, First South Financial CU, Bartlett, Tenn., with $476 million in assets, will roll out credit cards embedded with EMV technology to its membership as well.
First South Financial President/CEO Craig Esrael told the Memphis Daily News (Sept. 17) that the motivation behind the EMV technology rollout is to help members mitigate some of the risk of data getting hacked in incidents such as the Home Depot breach.
Esrael said the in light of the most recent data breach announcement, card holders will soon be able to use the chip technology as big issuers lay out their strategy for EMV implementation.
First South's cards will also include the mag stripe.