While the U.S. inches toward adoption of the EMV chip-card standard, some card makers and issuers are finding they need to move faster than others.
In particular, issuers with a large number of military personnel are getting into the act, with Service Credit Union providing Visa-branded EMV smart cards to military members stationed in Germany. The credit union, which has 17 branches near military bases in Germany and 23 branches in the U.S., did not say how many of its overseas members were having difficulty using magnetic stripe cards, but did say members were requesting payment cards to use in both the U.S. and Germany.
"The anecdotal evidence was that, over time, we were going to run into a situation where our members weren't going to be able to interact with the local economy," says Bill Arnold, chief information officer for the $2.2 billion-asset Service Credit Union, which serves people who work in parts of New Hampshire, Cape Cod, branches of the military, and Department of Defense employees and their families.
The credit union is issuing EMV cards using CardWizard software, an instant card issuing program sold by DataCard. The technology interfaces with the credit union's core banking application, data prep systems and network processors, so card development and personalization can be built into the credit union's existing card issuing environment.
The credit union previously offered its members EMV cards that worked only on a local network with a limited number of merchants.
"These older cards were only being used for smaller purchases, or our members were using euros for these purchases. If they were going into larger [international] retailers that had locations in Germany, the cards would not always work there," Arnold says.
The new cards will work at all Visa-accepting retailers and are both magnetic stripe and EMV compliant. Going forward, the EMV cards will be the primary cards issued in Germany, while U.S.-based members will have a choice.
With EMV cards, "there's more to it [than security]," Arnold says. "EMV is also a good feature for our members, who are military personnel and are at times in places where it's not good for them to stand out as Americans. The EMV cards help them blend in a little more."
The U.S. migration to EMV is expected to take a few more years, in line with card network-imposed deadlines and other shifts in technology. In the interim, companies such as Travelex and FIS have sold EMV cards for U.S. residents who travel. And issuers such as the United Nations Federal Credit union, Wells Fargo and JPMorgan Chase similarly offer EMV cards for travelers.
USAA, which has a large military customer base, recently made EMV cards available to consumers who travel abroad. The cards have a microchip that encrypts data differently for each purchase plus a special PIN assigned to each card.
Navy Federal Credit Union says it's not issuing EMV cards. "While Navy Federal has no immediate plans to introduce EMV technology, we're carefully monitoring the evolution and benefits of the service and will listen to the ongoing needs of our members," said Adam DeSanctis, a spokesman for the Navy Federal, in an email.
For issuers that are still relying primarily on magnetic-stripe cards, time is running out.
"It is getting much harder for U.S. cardholders to use a mag-stripe-only card overseas…and non-chip cards are increasingly problematic, especially at unattended kiosks such as ticket machines in train stations where mag-stripe cards are plain useless," says Julie Conroy, a research director for Aite Group.
Editor's Note: After this article was published, Navy Federal Credit Union provided a second statement indicating that it is developing plans to issue EMV cards, but it has not yet established a date to offer them.