Onsite Coverage: EMV Experts Agree Chip Cards Not Profitable
ST. PETERSBURG, Fla. — A panel of industry experts told a meeting of credit union card executives that cards outfitted with EMV smart chips are not likely to make any of their institutions any money.
The meeting Friday was part of Card Services for Credit Unions’ 2013 annual conference at the Vinoy Renaissance. CSCU is the association of credit unions that process payments with FIS.
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Bastian Knoppers, senior vice president, Card Personalization, at FIS advised the executives that soon they would need to present their boards of directors with proposals for switching their debit and credit card portfolios over from having cards with magnetic stripes on their backs to cards having EMV chips embedded in them.
Such a presentation was going to have to address questions about why, what, how, when and who, he told the group, and their challenge was that there is not a strong case for why.
“There is not a good-looking business case (for EMV), I can guarantee you that,” Knoppers told the group.
The problem, he said, is that absent a mandate from a government or from the major card brands, there is not really a strong case for paying the additional costs for EMV cards, at least not for an entire card portfolio.
The cards will significantly cut the cost of one type of fraud – counterfeit card fraud – but not necessarily others, he said and there is no other particularly compelling case for the change.
Cards enabled with EMV chips can cost between $2 and $4 more per card than cards with magnetic stripes.
Other executives on the panel, Kimberly Lawrence, head of Consumer Product Strategy for Visa; Docia Myer, vice president with the card manufacturer CPI, and Stephen Fedor, senior director with the Canadian Imperial Bank of Commerce, agreed with Knoppers that there was a poor short term business case for EMV cards, but that in the end they were a bit like fire insurance.
“Fire insurance is something we buy even though our house has never caught fire and we hope it will not,” said card consultant Mike Bradley, a principal with Northcard who moderated the panel.
“EMV is a way we need to protect our systems,” he said.