US banks slow to adopt chip-and-pin credit cards

May 29, 2014 |

Professionals on international business travel to the U.S. have run into difficulty with credit and debit cards as the U.S. has been slow to adopt what is called chip and pin technology, leading to unnecessary trouble for international travelers. According to North Carolina NBC affiliate WNCN, following data breaches at major stores such as Target, Michaels and Neiman Marcus, credit and debit card theft has been thrown into the spotlight, highlighting the vulnerabilities many corporations face as millions of their customers are at risk when such an event occurs.

The source reported that in the U.S., debit card fraud went up 80 percent between 2004 and 210 while credit card fraud is up 70 percent during the same time period. However, other countries in western Europe where the encrypted chip-and-pin (also known as EMV) cards are popular, such as the United Kingdom, credit card fraud is down as much as 63 percent.

“Instead of swiping a magnetic stripe, they’re actually going to be using the chip itself, Nathan Batts at the North Carolina Bankers Association told WNCN. “So the reader will look very similar, but the information is being pulled in a different way.”

According to WNCN, the U.S. has yet to fully to adopt the chip and pin technology. The cards are expected to make their major debut in the U.S. in 2015, although it will be years before they are fully implemented due to the cost to banks and retailers who could spend as much as $11 billion on the new technology.

Beginning October 1, 2015, Visa and MasterCard will charge banks and retailers who do not have updated technology to accommodate chip and pin debit and credit cards for any money lost as a result of fraudulent activity. The source stated that the move was announced as a way to encourage the issuance of chip-and-pin cards.

The U.S. will continue to monitor and target criminals who counterfeit cards until banks can complete the conversion to EMV debit and credit cards, according to WNCN.

Companies issuing EMV cards
Following the 2013 data breach at Target, the corporation announced it will release EMV cards in early 2015 to help protect consumers, WNCN reported. Financial institutions in the U.S. that currently use EMV technology include U.S. Bank’s FlexPerks® Travel Rewards Visa, Chase Sapphire Preferred, American Express Platinum, American Express Business Platinum, Barclaycard Arrival Plus World Elite MasterCard and some Citi cards such as Executive/AAdvantage World Elite MasterCard, Platinum Select AAdvantage Visa Signature and all Citi cards by request.

In addition, the Bank of Montreal will issue chip-and-pin corporate cards beginning in 2015 when customers’ cards are lost, stolen or need to be replaced. The bank’s ATMs will also become chip-certified by September 2014 although 75 percent of them are already certified for EMV use, Business Travel News reported.