Travel Season: Pack Bags, Swim Trunks, and EMV Chips
The Importance of EMV-ready Cards When Traveling
If you’re traveling abroad this summer, you might want to make sure you have at least one EMV-ready credit (or debit) card at your disposal for EMV cards travel. (The same might apply if you’re traveling a couple years into the future, after they become more widespread here in the U.S.!)
A recent article from the Washington Post tells of travel woes on the Autobahn, where our correspondent was trying to pay at an automated toll booth, with his American plastic: “Three futile swipes later, I nervously switched to my debit card. Cars started to line up behind me. Nothing. I fumbled for my Navy Federal Visa card. It, too, was rejected. In the resulting confusion, with the automated toll gate calmly issuing instructions in Italian, I dropped the plastic, and it blew into a busy lane.
The Downside of Not Having EMV Technology
“Don’t let this be you. The truth is, your American Visa or MasterCard works abroad, except when it doesn’t. When you absolutely have to pay for something, no matter where you are, carry a little local currency.”
Chip-and-PIN vs. Magnetic Strip
Of course, maintaining “cash reserves” is always wise. However, while your domestic cards aren’t completely useless in places like Brahms, Bergman, or Baudelaire, the real issue lies in the chip-and-PIN technology. Unlike us, they embrace this technology. For those unfamiliar, chip-and-PIN refers to the EMV smart card payment system prevalent in Europe and much of the world. This system confirms your identity through a computer chip in the card combined with a personal identification number or PIN.
Where Will Your Card Work?
This isn’t to say your magnetic strip card is useless during your summer vacation. In fact, major cities will accept it. However, you might face challenges with specific transactions like toll booths and train station ticket machines. As Matt Schulz, a senior industry analyst at CreditCards.com, points out, the farther you venture from popular areas, the more difficulties you might encounter.
The Future of EMV Cards in the U.S.
“So,” the article concludes, “do you need a chip-and-PIN card? If you’re headed overseas, and particularly to Europe, you probably do.”
The article then provides a list of current EMV card options that have minimal or no fees. Additionally, it highlights that by October 2015, around 70% of domestic credit cards are expected to have chips. So, what’s the significance of this date? Well, Visa and Mastercard have set this as the deadline. From this point on, the responsibility for fraudulent charges will shift from them to those issuers without chips or, in some scenarios, to the merchants themselves.
The Risk and Gamble of the October 2015 Deadline
At the same time, around 41% of debit cards are estimated to be likewise EMV’d, but an interesting new study in the Credit Union Times says that “fully 17% of credit unions surveyed for a new report on the U.S. debit industry told researchers they do not plan to issue debit cards with an embedded EMV chip. This means these credit unions risk taking all the liability for card fraud from their non-EMV enabled cards after the industry goes through its planned October 2015 liability shift.”
Why would they — along with some surveyed community banks — want to assume the risk? “The issuing gap might relate to the percentage of issuers which believe MasterCard and Visa will end up moving the date for the liability shift, pushing it back from the October 2015 deadline. According to the research, 59% of community banks believed the card brands would shift the deadline, with 39% of credit unions expecting such a shift and 20 of the largest banks looking for one.”
That still means that most credit unions are planning to issue the cards, of course, but the gamble on VISA and Mastercard yielding, substantially, from their stated deadlines, could be a costly one.
And if more “Target-level” breaches occur between then and now, the odds of such a gamble working will considerably diminish.
Get Ready for the EMV Transition with AVPS
All of which means you should start planning now, if you haven’t already, to contact your AVPS rep and get EMV-ready. Or any other kinds of “ready” your business might need, from eCommerce to ACH to mobile processing and more.
Stay Updated During Your Travels
Meanwhile, if you’re still packing for that trip — don’t forget to take a device where you can keep up with AVPS’ blogposts and news!