Card manufacturer CPI Card Group is bulking up to handle the anticipated demand for EMV-chip cards as issuers and merchants rush to meet the 2015 deadline set by the card networks.
EMV adoption is not mandatory, but those who miss the deadline face a shift in fraud liability (fuel merchants have an extra two years). Orders for EMV cards have dramatically expanded in recent weeks, says Steve Montross, president and CEO of CPI. He attributes this activity to fallout from the holiday-season data breaches at Target and other retailers.
"We've added equipment, space and extra people," Montross says. The company expanded its card processing space in Colorado by about 200% and hired 50 people. This is an increase in headcount of about 7% but a "substantial" increase in people with EMV production expertise, he says.
CPI Card Group provides production, personalization and fulfillment services for EMV and other payment cards. While issuers and merchants have been mixed in their ambition to handle EMV cards even after the Target breach, Montross says his company is getting busier.
"We've seen a recent spike in the number of card orders that we've been getting," Montross says, adding the company already had plans to add space and hire more people as the EMV deadline nears. But the retailer breaches caused the EMV rush to come faster than expected.
While EMV cards would have not stopped the Target breach, the incident drew attention to EMV and other security technology. Other EMV card production companies such as EFT Source also noted a volume increase after the Target breach.
A recent federal appeals court decision to uphold the Federal Reserve's debit interchange guidelines may spur more EMV conversions.
"The breaches have accelerated the migration plans," Montross says. "And the Fed decision has also cleared up some questions that the industry had about the migration."
The demand for EMV is not being seen everywhere. The processor Total System Services (TSYS) has just 18 issuers signed up for EMV, it said last week. This is a step up from the four it had six months ago, but issuers are taking it slow because they are waiting for merchants to deploy the proper technology. "It's a chicken-and-egg thing," TSYS chairman and CEO Philip W. Tomlinson said last week.
The expansions at CPI Group address the different steps of card production, which requires multi-layer card validation through high resolution images, holographic card over-laminates and laser-engraved attributes. Hardware is also required to print images on both sides of the card, and over the card edge, accommodating a contact chip or embedded antenna.
"We're also staffing to have people available to discuss how EMV works, how the cards are different and the things that banks, merchants and consumers need to know about the migration and the liability shift," Montross says.
Other companies are also ramping up for the EMV migration. FIS recently introduced instant issuance EMV technology, and Milan-based TAS Group is offering EMV card production in the U.S. Arroweye has also launched a product that allows financial institutions to manufacture, personalize and fulfill EMV card production. And SCIL is offering an option for modular EMV conversion at financial institutions and merchants.