Pub. 5 2015-2016 Issue 2

8 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE Nearly 600 million cards are expected to be issued in the United States by the end of this year, according to the EMV Migration Forum. AMANDA AVERCH COLORADO BANKERS ASSOCIATION EMV Card Technology is Coming T he United States is moving to new chip cards based on a global standard called EMV – short for Europay, MasterCard ® , and Visa ® – to enhance in-person payment security for consumers, merchants and card issuers. Data breaches at high-profile retailers including Target, Home Depot and Michaels have demonstrated – through millions of dol- lars in loss – the need for reinforced security solutions. EMV, which is already being used by more than 2.3 billion payment cards world- wide, eliminates the risk of fraud in in-person card transactions with an encryptedmicrochip embedded in the plastic that is nearly impos- sible to replicate. The Colorado Bankers Association recently gave an interview to JimHooley of Denver’s Fox 31 about the new EMV chip card technology. She praised the increased security measure as well as the liability shift, noting banks have borne the financial brunt of data breaches that they had no part in causing. The technology is not new, albeit not com- mon in the U.S. EMV cards have been used around the world for a number of years and some U.S. banks already issue them. Studies have shown that fraud in Europe has declined about 64 percent since the adoption of EMV. Each chip holds a number that changes after each transaction in which the card is present. This technology helps combat fraud including card counterfeiting, commonly known as “skimming,” using a stolen magnetic stripe. While cards will still have a magnetic stripe on the back after full migration to EMV, the embedded chip will bolster security. Whether the consumer signs for a purchase or enters a PIN, it is the chip technology that enables a more secure payment. Nearly 600 million cards are expected to be issued in the United States by the end of this year, according to the EMV Migration Forum. Beginning in October, merchants who have upgraded their credit and debit card equipment to be compatible with EMV may be held financially liable for card-present fraud that could have been prevented with the use of a chip-enabled point of sale (POS) system. However, if the merchant is presented with a fraudulent magnetic stripe-only card, the loss will go to the institution that issued the card, as it does today. This “fraud liability shift” for card issuers andmerchants is intended to help synchronize timelines to move industry stakeholders to implement chip technology. If neither or both parties are EMV ready following Oct. 1, the fraud liability remains as it is today. Source: SunTrust THE WALL STREET JOURNAL Chips and Dips New credit-card technology promises more safety—and more steps. Focus groups have shown some shoppers might require time to get used to the new chip card procedure. Traditional method 1. Customer slides card into bottom front of the device, a move that might not be obvious at first. 2. Card remains in device as customer enters PIN on keypad or provides a signature, a change for people who are accustomed to swiping. 3. After transaction is complete, customer removes the card. Terminal may beep to remind shopper to remove card. Customers swipe their card and then enter their PIN or provide their signature.