Is the U.S. getting in the mood for EMV?

Europay MasterCard Visa, or EMV, the international standard for the interoperation of chip and PIN cards to prevent ATM fraud, stands a better chance of coming to America than it had before now that of a series of unrelated incidents have worked in concert to force banks to reevaluate their opposition.

"There has been a change in tone about EMV. It used to be not here. Now, they are asking when?" said Ian Kerr, CEO ofLevel Four Software Ltd., a Dunfermline, Scotland, technology company that provides open standards-based ATM software to banks, payment processors and other financial institutions.

Alan Walsh, executive vice president ofWincor Nixdorf Inc.'s U.S. Banking Division, shares Kerr's belief that banks are re-thinking their opposition to chip and PIN, or EMV. That belief is based on the number of customer calls he has received about ATM skimming attacks in which thieves steal cardholders' debit cards' numbers and PINs to manufacture counterfeit cards and then loot cardholders' bank accounts with the stolen data.

"A lot of people are ringing up," said Walsh, echoing Kerr's statements. "At one time, they would say no way it will never happen here. Now, they expect it to happen here."

But not everyone is convinced U.S. financial institutions are ready to adopt EMV, or even think it is necessary.

Kerr argues, however, that fraud, such as ATM skimming, is migrating to the United States because of EMV adoption in Europe, where chip and PIN reduced ATM fraud 36 percent last year compared with 2008, according to the European ATM Security Team in Edinburgh, Scotland.

Canada and Australia are also moving to chip and PIN, and banks in Mexico are testing EMV, as are other countries, reports Germalto N.V., a data security company based in Amsterdam, the Netherlands. Germalto reported that countries which have adopted EMV grew from 24 percent in 2007 to 41 percent in 2008. By Dec. 31, 2012, all ATMs in Canada must be converted to processing EMV transactions, according to Michael Dominelli, vice president of marketing for NRT Technology Corp., a Toronto-based business that owns TNS Smart Network, a deployer of white-label ATMs.

U.S.-based ATMs are a target of fraudsters. Robert L. Siciliano, CEO of IDTheftSecurity.com, a Boston-based business, recently told Wincor Nixdorf Inc. executives that all types of fraud, but mostly skimming, costs cardholders $1 billion annually at ATMs.

United States-based financial institutions and card associations generally have been silent about EMV. ATMmarketplace.com contacted JPMorgan Chase & Co., the nation's second-largest bank owner of ATMs with 14,444 machines. A Chase spokesperson declined to comment. San Francisco-based Visa Inc., the world's largest payments network, referred inquiries to the American Bankers Association, which did return a call for comment.

But not every U.S. financial institution has turned a deaf ear to chip and PIN.

The United Nations Federal Credit Union in New York City has begun issuing chip and PIN cards to members, many of whom regularly travel overseas. "Our members had many customers asking them to provide a card that would be interoperable in countries that have implemented EMV," said Merrill Halpern, the credit union's card services manager.

Halpern's comments touch on Kerr's third argument as to why American banks should adopt EMV. Some European ATMs are rejecting American tourists' magnetic-stripe cards. Canadian ATMs will stop accepting magnetic stripe cards in 2012, and European countries may do the same thing.

TowerGroup's Riley said U.S. financial institutions could easily eliminate the inconvenience of card rejection by issuing temporary EMV cards to customers planning to travel abroad.

U.S. financial institutions have been reluctant to openly talk about EMV adoption because the American market is so big, Kerr says. There are more than 400,000 bank and independently owned ATMs, 2 million payment card terminals and 600 million credit and debit cards. A magnetic-stripe card costs 19 cents compared with a chip and PIN card that costs about $1, Riley said.

U.S. financial institutions would have to spend $8 billion converting to chip and PIN from magnetic- stripe cards, Siciliano said. He added that it would cost $500 million to upgrade the nation's ATMs, $1.4 billion to replace all of the magnetic-stripe cards with chip and PIN cards and $6.75 billion to upgrade and or replace the nation's point-of-sale terminals to process EMV transactions.

The multibillion figure, though large, is not the key factor, he said.

"Eight billion dollars is a drop in the bucket," Siciliano said. "There are unnamed organizations that are resistant to change because they would benefit financially from an increase in fraud."

Still, despite the challenges, Kerr believes the once strong no has become a maybe.

"There has been a change in tone about EMV, but it would be a huge undertaking because the U.S. market is massive," Kerr said.