I found it interesting when I was out doing Town Hall meetings this Spring that several financial institutions are gearing up to provide not only chip credit cards but debit cards to account holders. There was no mandate for institutions to issue these types of cards. However, with all the hype that the media has given about EMV (chip cards), account holders are looking to their financial institutions to start issuing this type of technology. These new cards will be very costly for institutions; however, most institutions I talked to felt that issuing the cards would be better than getting a reputation as the only institution out there not jumping on the EMV bandwagon.
An article I read not too long ago stated that nearly 70% of small businesses will not have a chip-enabled terminal by the liability shift date of October 2015 due to cost. This will help with card present fraud for institutions because in these cases the liability will shift back to the merchant. However, over time, as merchants upgrade terminals, the liability will then go back on the issuer (the financial institutions). So, I believe the reward of shifting this liability to merchants will only be temporary for institutions. In the end, institutions will get the liability back as well as endure the cost of issuing higher dollar plastic. It will be interesting to see if institutions start putting some fees around these chip cards.
Marcy Cauthon, AAP, NCP
Director, Payments Education