Local banks comment on coming EMV debit, credit card changeover

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In the coming months, credit card companies and banks will look to combat fraud by issuing EMV cards. Equipped with chips (shown in the image here) that store and protect cardholder data, the cards will be inserted into terminals and left there throughout the entire transaction rather than quickly swiped.

Technology to better protect consumers from fraud


By Audrey Posten, North Iowa Times Editor

Millions of Americans fall prey to identity theft each year, with credit and debit card fraud one of the biggest culprits. In the coming months, credit card companies and banks will look to combat fraud by issuing EMV cards.

EMV—which stands for Europay, MasterCard and Visa, the original developers of the technology—is the global standard for debit and credit cards equipped with chip technology, meaning each card is embedded with a microprocessor chip that stores and protects cardholder data.

“The new cards will have an electronic chip on the front that contains a complex algorithm,” explained Krista Fischer, IT officer with FreedomBank. 

Instead of being swiped like current cards with magnetic strips, EMV cards will be inserted into terminals, in slots located below the key pad, and left there throughout the entire transaction.

“When you put the card in, the machine clamps down on it and completes the transfer,” Fischer added.

“The chip itself has everything encrypted and the machine can unencrypt it,” noted Melissa Bonnette, senior operations officer with Central State Bank. “It’s very intricate.”

The technology is so intricate that each transaction creates a unique code that can never be used again, preventing hackers from easily duplicating the card. Magnetic strips, on the other hand, contain unchanging data, allowing hackers to replicate it again and again.

According to Fischer, Europe has had EMV card technology for 11 years, making the United States a prime target for fraud. In fact, the Nilson Report determined the U.S. accounts for nearly half of all global card fraud, yet holds just 24 percent of the world’s cards.

U.S. institutions hope to have many consumers transitioned to EMV cards by October of this year, however, the full changeover will take several years. 

Until the conversion is complete, cards will be issued with both chips and magnetic strips.

“We’ll probably change over toward the end of the year or the beginning of next year,” Fischer said. “There are a lot of card holders. We have 5,600.”

Fischer said, at FreedomBank, customers will likely get EMV cards when their debit cards come up for renewal. Bonnette said Central State Bank will do the same.

Fischer said those traveling internationally will also be equipped with new EMV cards so they can complete transactions wherever they are.

Bonnette said switching from a quick swipe to sticking the card in a slot and waiting will take some getting used to for people. 

“With ATMs, in the beginning, they would suck the card in and do the transaction,” she said. “So, in essence, it’s going back to that, where now the card just sits in there.”

While EMV cards can be used for online transactions, the chip will only protect consumers in card-present situations, at physical stores, restaurants or other businesses.

Like with magnetic strip cards, cardholders will have to either sign for a credit purchase or enter a PIN number for a debit purchase.

As credit card companies and banks issue customers new cards, businesses will also be expected to upgrade their card terminals to accept the cards.

“On the merchant’s end, they have to spend the money to upgrade,” Fischer said, noting that some, like Wal-Mart, have already done so. “Then, at merchants who accept the cards, you’re not going to see the risk of getting your information stolen.”

If merchants don’t upgrade, but customers have an EMV card, the business will be on the hook for any fraudulent transactions that occur because the customer had to instead swipe the card’s magnetic strip.

“This shifts the liability,” Fischer explained. “We, as a bank, issue the cards, but the merchant would be the one who accepts the fraud.”

“It will be a great advantage because, now, the liability falls on the bank. Even though it’s truly fraud, the bank has to eat that cost,” Bonnette added. “It will shift to whoever doesn’t have the EMV capability in place. We should see fraud [costs] cut down significantly.”

Although EMV cards will certainly offer people more security, both Bonnette and Fischer were quick to mention that consumers must remain vigilant online. They recommend people use credit, rather than debit, cards for online purchases.

“The liability is better and it’s easier to stop transactions,” Bonnette said of using credit cards.

“With credit cards, the burden is on the card company,” Fischer stated. “They’re much bigger and have better systems in place.”

Ultimately, though, said Fischer, it all comes down to personal responsibility.

“Make sure websites are secure and that whatever device you’re using is secure,” she said. “Have good security habits. There’s a lot of fraud out there.”

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