Blog

EMV migration and the FI brand: What could it mean for you?

September 10, 2013 by Rebecca Hellmann — Marketing and Sales Coordinator, Welch ATM

EMV chip technology is already common in the payments industry, used throughout Europe, Canada, Australia, Mexico, Latin America, Africa and most of the Asia-Pacific countries. It is easy to see why many of these countries were so quick to make the switch from the magnetic stripe to a newer, harder to duplicate technology: reduced card fraud.

Before implementation of EMV, card fraud in Europe alone was easily four times that of the United States. However, as one of the few countries not yet using EMV, the U.S. has quickly become the easiest target for card fraud and the numbers are beginning to reflect that.

A recent Nilson study on global fraud reported that the U.S. accounted for 47.3 percent of global fraud losses in 2012.

The European Central Bank has found that 78 percent of all counterfeit card fraud now occurs in countries where EMV adoption lags behind Europen. U.S.-based card counterfeiting posed a particular problem, contributing to more than 26 percent of global fraud losses in 2012.

This disturbing information, as well as the looming threat of EMV liability shifts put in place by the card networks, points to one conclusion. Whether we like it or not, the U.S. is going to have to make the migration to EMV.

This news — aside from the costs incurred by the initial migration — does not have to be all bad for financial institutions. There are many positives to a nationwide transfer to EMV cards and terminals.

First, it gives the FI a very real reason to open up conversations with customers and members. EMV chips must remain in contact with POS and ATM terminals throughout a transaction, eliminating the current swipe or dip behaviors.

This very idea should be sending up a red flag with marketing and PR departments. After all, how will consumers know about this potentially frustrating change if you don't tell them?

Crafting a full brand campaign around the EMV shift is the first step in educating customers and members.

It is important not only to remember your financial institution's audience but also to keep in mind that people learn differently. A direct mail campaign with illustrations and instructions may work for some while an online campaign using social media, email and instructional videos may work for others.

There may even be a need to set up a demonstration area at the branch where customers and members can see and experience the difference between the current mag stripe readers and an EMV terminal.

Even though major liability shift dates are a year or more away, it is important to start informing customers and members of the impending change now — or, at the very least, to begin building your communications plan.

The second benefit of introducing EMV in the U.S. is card security. As criminals have yet to successfully duplicate an EMV card, the technology will significantly reduce one area of fraud that is increasingly plaguing the United States financial industry.

Increased card security also means increased brand security. The financial institution can rest easy about skimming at the POS and ATM terminals, and turn its focus to the more problematic ssue of locking down backoffice operations to protect member information.

An increased level of security coupled with a targeted communications campaign can build greater confidence in U.S. financial institution brands — all thanks to EMV.

Read more about EMV.