A New Era Of Credit Cards

Credit unions are making plans to roll out new credit cards with EMV chip technology in advance of the shift of fraud liability in 2015.
Drew Grossman

On October 15, 2015, the liability for fraud will shift from card issuers to merchants who have not adopted a terminal to read EMV (Europay, Mastercard, Visa) chip cards. EMV is the standard payment technology in Europe and many parts of the world. The card is more secure, more versatile, and more expensive. To continue to serve members after the liability shift, credit unions are making plans now to roll out new credit cards with EMV chip technology.

Julie Moran, vice president of support services at Digital Credit Union ($5.1B, Marlborough, MA) is running the show for large credit union’s EMV rollout. Here, she talks about Digital’s experience with EMV and how the switch will affect credit unions.

What is Digital’s strategy for converting to EMV cards?


  • Digital Credit Union
  • HQ: Marlborough, MA
  • ASSETS: $5.1B
  • MEMBERS: 406,689
  • 12-MO SHARE GROWTH: 10.67%
  • 12-MO LOAN GROWTH: 11.87%
  • ROA: 1.46%

Julie Moran: By the end of the calendar year, we’re going to launch a credit travel card for members who travel out of the country. We will be getting our feet wet with the travel card. It will be an EMV and magnetic strip card, so we’re currently in the process of looking at that. The next step is to reissue EMV cards for the credit portfolio. We’re hoping to do that starting late this year, early next year. We’re doing it for reissues as they occur rather than a mass reissue. We’re not moving forward with the debit card until we make some decisions regarding that.

Why wait to convert debit cards?

JM: We’re waiting to let the legislation settle and see what is being done with debit cards. Also, credit is the most common source of fraud, so we want to make sure we do that first.

Are members aware of EMV? Do they request it?

JM: The only feedback we’ve gotten on the EMV cards is from members who are travelers.

What is the burden on a credit union switching over to EMV?

JM: If you look at the basics, the cost of the card is pretty much double. So that’s the first aspect. Then you have the initial start-up costs because there are a lot of processes you have to change working with your different vendors to get ready for the back-end processing and assuring that will work. We’re getting a handle on all that now, so I don’t have an estimate, but the expense is there.

Now, in some credit unions, you might offset the costs with prevention of fraud loss. We don’t have that much card-present card fraud, a lot of ours is card-not-present. EMV isn’t a solution for that, and we’ve been told to expect an increase in non-card-present fraud because of EMV, at least initially.

Is that because as EMV is adopted and card-present fraud becomes more difficult, comparatively, non-card-present fraud will be an easier target?

JM: Correct.

Is there concern a new payment technology will surpass EMV by the time credit unions roll it out?

JM: I’ve been doing a lot of research on different payment methods, such as mobile wallet, and looking into what we might get involved in. I definitely think it’s coming, I just don’t think it’s going to be in time. There are so many variations and you have consumer adoptability and merchant adoptability that need to come in line, so I think it’s going to take longer for that to happen. But it’s definitely coming, so we’re looking at mobile payment as the new direction.

Even with our online banking, we have some members who never use online banking, they only use the mobile app. They never go online on their PC; it’s always on their device. I think that’s where we are going. I just don’t think it’s going to be fast enough.

Are there any reasons to hold off converting until closer to the liability shift?

JM: I don’t think [credit unions are] holding off for any other reason then just to make sure their plan is in place, the cost and how that’s going to factor into it, and how they’re going to reissue. And from talking to people about their strategies, I’ve found it’s not too different from mine. With the liability shift, it’s really the same to us as issuers. If we miss the shift date, the burden is still on us, like it is now. Once we shift, it’s on the merchant. So there will be that benefit, but if we wait it isn’t a penalty.

What advice would you share with other credit unions converting to EMV cards?

JM: There are so many pieces in the process you don’t think of until you’re actually changing, so work closely with all your vendors. Our vendors have been knowledgeable and have already switched some financial institutions over, so they’ve been a good resource.

February 3, 2014

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