By Vladimir Jovanovic
As the United States payment card industry moves away from magnetic-stripe credit and debit cards to ones that utilize EMV chips, it’s vital for consumers, businesses and credit unions to get up to speed on the new technology in the coming months.
October 1, 2015 marks a significant milestone in the industry as the liability in card fraud will essentially shift from the issuer to the party that isn’t supporting EMV technology. And by 2017, the policy will extend to automated teller machines and fuel dispensers at gas stations.
The Current Landscape
A report released by global payment technology solutions company First Data explains how more than half of all fraudulent card transactions happen in the United States, and losses due to credit card fraud are expected to top over $10 billion in 2015 alone. In addition, credit card fraud rates have doubled in recent years, representing 10 cents out of every $100 transacted. But that could soon be changing
The New Landscape
According to First Data, industry experts predict that there will eventually be more than 575-million EMV chip-enabled payment cards in circulation in the United States. For financial institutions, the biggest benefit of EMV is the powerful fraud prevention technology in the chip. Since every EMV card is essentially a small, secure computer, they are far less vulnerable and nearly impossible to counterfeit.
Credit union card issuers currently absorb $430-million in fraud losses split between $206 million in card-present and $224 million in card-not-present transactions. But based on other countries’ EMV experiences, card-present fraud losses will be reduced by 40% to 60%, and generate up to $100-million that credit unions could return to their members in the form of lower loan rates or higher dividends.
Taking advantage of this solution, PSCU recently partnered with First Data to be the first CUSO certified to issue debit cards with EMV technology to member-owner credit unions across the country. The partnership focuses on providing safe, secure transactions to all consumers by leveraging the protections EMV chip cards offer.
Since other countries have largely already converted to EMV, the new technology will also help credit unions attract and engage more high-value members who travel internationally, as well as military personnel and students overseas, who aren’t able to use magnetic-stripe credit cards abroad. Furthermore, the innovative encryption technology serves as a gateway for the development of future mobile payments methods. It’s only a matter of time before even more new transaction experiences are available to consumers, businesses and credit unions.
Vladimir Jovanovic leads the Debit, Prepaid and ATM Product Management at PSCU, with responsibility for strategic direction of the company's payment products and services. With over 15 years of payment industry experience, Jovanovic is a proven payment strategy leader, focused on providing product and services that position PSCU for success.