SAN DIEGO-Credit unions issuing debit or credit cards should plan to migrate to chip technology soon.
Three people, Ann Davidson, senior consultant-risk management with CUNA Mutual Group; Hap Huynh, business leader-chip infrastructure management with Visa, and Leanne Phelps, SVP-card services at State Employees' (N.C.) Credit Union, told America's CU Conference here it's time to move away from the magnetic stripe.
"The U.S. is the last country in the world to convert to chip technology across its payment structure, which has made us the magnetic stripe fraud hot spot for criminals worldwide," Davidson said. "We're easy money."
Migrating to Euro MasterCard/Visa (EMV) contact and contactless chip technology will help combat card-present magnetic stripe fraud. "By having chip technology as an additional payment option, credit unions will likely experience a significant decrease in counterfeit magnetic stripe fraud provided their cardholders use the chip capability on the card," Davidson said.
Chip technology offers various options for credit unions including chip and PIN or contactless technology (Visa payWave/MasterCard PayPass).
"Dynamic authentication employs unique data in each transaction, which enhances security," Huynh said. "The standard chip fields also support mobile near field communication and contactless and contact chip transactions."
Other Forces At Work
Other forces are pressuring card issuers to make the switch. Visa announced last August plans to accelerate the migration to EMV chip technology in the U.S. MasterCard also announced all Maestro ATM transactions occurring in the U.S. will need to be compliant with EMV standards to avoid a liability shift.
"When merchants become responsible for fraud losses, many will opt to no longer accept the increased risk of accepting magnetic stripe transactions. If you're not offering chip technology, your cards may not be accepted, which will create PR and member service issues and put your credit union at a competitive disadvantage," Huynh said.
State Employees' Credit Union successfully completed its switch to chip technology in 2011 for more than one-million debit cards, Phelps said. State Employees' is currently migrating their existing credit cards.
Davidson and Phelps emphasized employee and member education is key to a successful migration to chip technology. They also advised developing print and online educational information that help members understand how chip technology works.