Have you had this experience? One of your members, fresh fromthe airport, angrily explains that your credit union's card isuseless in Europe. A growing number of credit unions are hearingit. Those of you with a large number of members living or travelingabroad may already be doing something about it. A handful ofinstitutions are already getting onboard and issuing chipcards.

I believe the U.S. switch to EMV (Europay, MasterCard, Visa)smart cards is inevitable. The only question is how quickly it willhappen and at what point it will become cost-effective for you tojoin the trend. As mentioned, the first trickle in the flood is themembers who travel or live abroad. Admittedly, this is a smallpercentage of all credit union card users, but I'm guessing thatmembers who travel internationally for business are not ones youwant to ignore.

There are other change factors at work. It's on the merchantside that much of the heavy lifting has to happen. Merchants mustbear the expense of changing their card readers. Big box storeslike Walmart, Best Buy and Home Depot have already made the switch,along with many merchants along the Canadian/U.S. border. But whatabout everyone else?

For everyone else Visa has added an incentive. Beginning inOctober of this year, Visa has eliminated the annual PCI compliancehurdle for merchants that have had at least 75% of theirtransactions coming through chip-enabled terminals in the prioryear. These terminals will also have to support contactless chipsand mobile near field communication technology. Visa is alsomandating that acquirer processors support merchant acceptance ofchip transactions by early in 2013.

The inclusion of NFC mobile technology in Visa's requirements isimportant. We are all witnessing the huge and ever-growing shift tomobile. EMV cards are going to ride in on the wave with mobilepayments. It will be part of the technology shift and quitepossibly the most influential factor in bringing EMV to theU.S.

Relief from annual PCI validation is Visa's financial carrotheld out to merchants. Beginning in 2015, it also adds a stick.Visa will begin shifting more liability for counterfeitcard-present POS transactions to merchants who are not using chipcard readers.

You can see the seeds of change here. Visa is proddingmerchants, and will probably be joined by the other major cardcompanies. Issuers have an incentive, too, via interchange. Littleby little, the momentum will build until eventually the U.S. joinsthe rest of the world in the acceptance of this technology.

We shouldn't forget the benefits on the fraud side – the actualreason behind EMV cards. According to EAST, (European ATM SecurityTeam), ATM fraud dropped by 14% in Europe in 2010. This is largelya result of chip technology. As the rest of the world gets extraskimming protection, our country could become the natural target ofskimming fraudsters. An increase in skimming here could offer yetanother incentive for both merchants and issuers to jump on thebandwagon.

The change is coming, and for issuers, it will be most costlyfor the largest banks. Here is an area where more nimble creditunions can take the lead. Right now a couple large banks (JPMorganChase and Wells Fargo) are beginning to offer EMV cards for theirtraveling cardholders. Small credit unions can match this benefitfor their own business and vacation travel members with minimalexpense. I can tell you that JHA Payment Processing Solutions hasalready had more than a dozen clients inquire about chip cards.

This brings us back to a question I asked earlier. When is itcost-effective to begin offering chip cards to your members? To sumup what I've been saying, it will depend one or a combination offactors:

The number of world travelers among your members.

• How quickly Visa's requirements persuade a critical mass ofmerchants to switch their card readers.
• The size of consumer demand for NFC readers for mobile phonepurchases.
• A possible increase in losses due to skimming.

I can't read tea leaves better than anyone else, but it seemsobvious that the transition is beginning. Credit unions ought tohave this change on their radars. For some there may be animmediate competitive advantage.

John Postle isgeneral manager of JHA Payment Processing Solutions at Jack Henry& Associates Inc. in Monett, Mo.