Credit Union Technology Who Really Pays when it Comes to EMV?


Who Really Pays when it Comes to EMV?

bigstock-Macro-business-chip-card-21886523-676699-edited.jpgCUNA reported earlier this year that 36% of credit unions don’t anticipate full EMV functionality until at least the end of 2016.  CUNA also noted “Nearly six in 10 credit unions will rely on a rolling reissue as magnetic stripe cards expire, while 27% elect for a complete, simultaneous reissue. Only 7% of credit unions have no plans to convert to EMV."  The Credit Union Times ran a recent survey, in conjunction with CSCU, which found 78% of credit unions have yet to implement EMV cards as of November 19, 2015.  

We are past the October 1 deadline set by Europay, MasterCard and Visa and the real costs of the EMV liability shift are beginning to come into focus. 

This shift has not been cheap, and credit unions have spent a lot of money on issuing new cards.  Merchants have also had to ‘fork’ over money for new card readers, which has led to new tensions between merchants and financial institutions over the cost of the transition.  

Keep in mind that if a merchant has upgraded to new card readers, liability is the same as it was when magnetic stripes were the standard. In other words, they were not liable for chargebacks before, but with the shift, are only liable if they didn't upgrade.  In this scenario, the merchant had to spend the money to upgrade to new hardware, but in real terms, the merchant gained nothing.  Add to this, credit unions issuing new EMV cards had to pay the reissue cost, which industry experts have estimated are in the neighborhood of $1.00 per card.  Depending on the number of cards your credit union has, this cost begins to add up quickly.  

Clearly the bulk of the real costs have been paid by financial institutions, including credit unions, in the form of plastic.  An argument can be made that merchants have had to pay to upgrade equipment, however the life span of a card reader follows the standard hardware lifecycle of 3 – 5 years, which means most merchants probably already had a budget in place for such upgrades.  While not to diminish the merchants investment in EMV readers, credit unions are among the financial institutions paying for this change – of course the purpose of this cost or investment (if you prefer) should be reduced fraud, in which case everyone wins. 

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Preston Packer

Written By: Preston Packer

Executive Vice President | CMO at FLEX Credit Union Technology
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