More banks, merchants converting to EMV chip cards

Consumers soon won't have to swipe their credit cards at the check-out counter.

The United States is making the move to Europay, MasterCard and Visa (EMV) cards in an effort to address fraudulent charges and increase security for card holders.

But unlike the quick swipe action required for magnetic-strip cards, customers will instead insert EMV cards into machines and remove them after the transactions are completed.

'The member experience is definitely going to change,' said Todd Link, senior vice president, risk management and remote delivery at Dupaco Community Credit Union.

Some Eastern Iowa credit unions and banks plan to begin distributing EMV credit cards in time for an October deadline, while others already have began to issue EMV credit cards.

Credit unions and banks also are making plans to offer EMV debit cards, such as MidWestOne Bank, which plans to start issuing them this fall.

Kim Ross, vice president, deposit operations with MidWestOne in Iowa City, said card providers began to shift to EMV years ago, but there was an increased push to transition to EMV cards after large security breaches at American companies.

Unlike current cards that store information on magnetic strips, EVM cards store information on computer chips, Ross said.

When an EMV card is used, it creates a one-time code for each transaction, making the information gathered by merchants useless to people looking to making copies.

'It's basically sending encrypted data so it's nearly impossible to create a plastic from that data,' Ross said.

The new EMV cards still will have a magnetic strip, so consumers still can purchase from merchants with traditional card machines.

Besides making transactions more secure, the October switch to EMV also will bring what's called a 'liability change,' Ross said.

Currently, if a fraudulent charge occurs, the bank that issues the card pays.

With the liability change, Ross said merchants that do not offer EMV-accessible machines would be liable for paying for the fraudulent purchases that happen in their stores. Banks would continue to cover fraudulent charges if merchants offer EMV-accessible machines, she said.

'This is not going to be pushing the liability back to the consumer at all,' Ross said.

Ross said larger merchants already have started to offer EMV-accessible machines because they have more stores to cover.

While EMV cards might be new to American consumers, Link said European consumers have been using EMV cards for about a decade.

'We are actually becoming much more lock step with the rest of the world,' Link said, noting the cards will help consumers who travel outside the United States.

Tim Meier, vice president of marketing at Collins Community Credit Union, said while EMV cards are set to dramatically reduce in-person fraud, they will not address online shopping fraud.

'It does make the product more secure, but it's not a complete fix for fraud,' Meier said.

Overall, Ross said the switch to EMV will be a gradual change as more merchants and consumers come on board and become more familiar with EMV technology.

'Technology changes every day,' she said. 'And I think it's a matter of getting everybody on board.'