American banks and credit unions have already issued over one million credit cards with embedded EMV chips, according to a new report from payment platform operator Visa. In a statement to reporters, company officials noted that customer requests drove a significant ramp-up in the number of cards that supplement a traditional magnetic stripe with a microchip designed to be read by inserting the card into a payment terminal.
EMV chips grew in popularity across Europe as an inexpensive security measure in locations where merchants couldn't rely on real-time credit card authentication. To combat waves of cloned magnetic stripe credit cards, many European retailers have stopped accepting credit cards without EMV chips. Frequent business travelers encouraged Wells Fargo, Chase and a handful of credit unions to issue EMV credit cards and reduce overseas payment hassles.
EMV chips don't require PINs in the United States
Although European consumers and merchants refer to EMV-enabled cards as "chip-and-PIN," American merchants need not require customers to enter personal identification numbers at checkout. Under the "chip-and-signature" security profile, merchants still enjoy enhanced security compared to potentially cloned magnetic stripes. Chase touted the security features of EMV chips during its nationwide roll-out of the British Airways Visa Signature credit card, the first airline credit card to include the chip by default.
However, newer versions of the EMV standard may render exposed chips obsolete over the next few years. Visa has already urged merchants to prepare their point of sale systems for contactless EMV cards with "wave and pay" or "tap and go" functionality. Retailers who install contactless payment terminals before 2015 can save money by avoiding costly security compliance audits. Contactless payment terminals process temporary authentication tokens instead of raw account numbers, reducing the potential for fraud and theft.
Therefore, excitement over EMV chips in the United States may be short-lived. According to an industry analyst contacted by Credit Union Times' David Morrison, the American adoption rate of a million cards in 18 months signals little more than a "boutique and travel" niche concerned with convenience and high security.