Financial institutions need to consider ATM updates for EMV transitions
As more U.S. financial institutions roll out cards with Europay, Mastercard and Visa technology, banks and credit unions may need to consider their current ATM capabilities. Although debit cards in Europe have been using EMV chips for some time, the U.S. has been making a gradual shift toward this standard in the financial industry.
A new report from Aite Group revealed 70 percent of all U.S. credit cards and 41 percent of debit cards will contain EMV chips within the next year. According to "EMV" Lessons Learned and the U.S. Outlook," the majority of card issuers already are planning to make this transition.
There will be a required liability shift for EMV migration from financial institutions to merchants in October 2015. This transition is the result of increasing credit and debit card fraud, mobile payments technology and decreasing costs of EMV chips and terminals.
Banks and credit unions need to prepare for the EMV transition
Citing additional data from the Aite Group report, EE Times stated that credit card fraud has doubled since 2007, and fraudulent debit card activity has dramatically increased as well. It is also more difficult for U.S. travelers to use their magnetic stripe cards overseas. These factors are speeding up the transition to EMV.
Although the majority of credit cards will include EMV chips before the liability deadline in 2015, the transition for debit cards has been somewhat slower, according to eWeek. The delay was largely the result of a federal court decision about the Federal Reserve's authority to establish routing procedures for debit cards. This in particular could be challenging for banks and credit unions because many financial institutions put off implementing any ATM transition for EMV.
The majority of U.S. EMV-enabled debit cards are expected to be chip and PIN cards because most consumers who use debit cards are already used to entering a PIN to complete transactions, eWeek pointed out.
Even though the shift appears to be gradual, industry experts predict that the full move will take place ahead of the deadline in October 2015. Financial institutions that do not have plans in place for transitioning their ATMs to EMV need to do so. Banks and credit unions have some time to prepare for the shift because there is a two-year delay.