Posted: Nov 29, 2018
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The EMV migration and fraud liability shift continue in the United States, and some issuers are still going through a natural re-issue process for both debit and credit card products to issue chip cards to their cardholders.  Many national issuers implemented chip card technology utilizing a mass re-issue strategy, while a small number of issuers haven’t started issuing chip cards. Others never plan to issue chip cards as there is no mandate requiring issuers to do so.  Issuers who choose to continue to issue magstripe cards instead of chip cards, and issuers who have not completed a natural re-issue, are deciding to accept the risk of the liability shift for fraudulent transactions. They are also taking the risk of losing cardholder transaction volume. 

While card present fraud has declined, CNP or card not present fraud is increasing.  For merchants who have implemented chip card technology terminals, counterfeit fraud has dropped 75% in March 2018 compared to December 2015. 


Over 3.1M merchant locations in the U.S. now accept chip cards representing 67% of storefronts. However, some merchants are taking an alternative approach to mitigate fraud losses by refusing to accept magstripe cards and are only accepting debit and credit chip cards.  This user experience is similar to merchants who refuse to accept personal checks.  Issuers who have not started or finished a natural re-issue chip card implementation for credit and debit portfolios risk losing cardholder transaction volume or losing their top of wallet position with cardholders who have chip cards issued by another FI. This may also unintentionally limit transaction growth opportunities if cardholders are limited to where they can use a magstripe card during card present transactions.


A sign seen at a restaurant recently.

Issuers cannot continue to wait to implement chip card technology thinking tap and go transactions using NFC technology, or mobile wallets will transcend chip card technology, thus rendering chip technology unnecessary. How will your call center representatives explain to your members why your credit union does not issue chip cards?

Also, still thinking contactless cards won’t take off in the U.S? Once the #1 U.S. credit card issuer, Chase implements tap and go on their Visa credit and debit cards, millions of cardholders will be able to use Chase issued cards in a fast, easy and secure experience. If you are playing the wait and see game, it’s time to get on board and be a player in the payments industry as your cardholders will look to other financial providers who issue chip cards and utilize NFC technology. 

The magstripe isn’t going away, just like the penny is still in circulation and card products have not replaced checks completely. And, there is currently no mandate for issuers to stop issuing cards with magstripes, plus merchants are not required to implement chip card terminals.  However, consumers want and, more importantly, expect their card issuers to provide secure methods to make purchases.  Issuers are tasked with providing a variety of ways that cardholders can utilize for purchases and can no longer rely on magstripe transaction functionality being appealing to all members, particularly future members.

As the payments industry continues to present more and more options to consumers, issuers must have a clear strategy to meet member needs and expectations including chip, tap and go, mobile and digital wallets, instant issue, and digital card issuance.  Need help with creating a payments strategy?  Let Trellance’s Dedicated Consulting team help you to define and create a plan for your credit union. 


Stephanie  Hainje

Stephanie HainjeStephanie Hainje

Trellance's Director of Education, Stephanie Hainje is an experienced card industry professional with credit and debit card program management from her previous career at Purdue Federal Credit Union, a leading affinity credit card issuer and top 100 Visa USA issuer.

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