My Technology

Bank cards based on chip-and-PIN know-how continue to make inroads in the United States, based on two not too long ago released studies. It's time for retailers - and their service provider providers providers - to brace themselves for the transition from magnetic stripe to chip-and-PIN bank card processing.

Chip-and-PIN relies on a microprocessor chip to retailer account information on the cardboard and a PIN (private identification quantity) to "unlock" it at the point of sale. Also called the EMV (Europay-MasterCard-Visa) customary, it's considered safer than the magazine stripe technology that has been the basis of credit card processing for more than 40 years. Few nice technological innovations such because the credit card magazine strip have endured for so lengthy with none innovations.

The United Nations Federal Credit Union (UNFCU) stories one yr after it launched a chip-and-PIN card within the U.S. that there was a 20% leap in revolving balances from October 2010 to February 2011 in comparison with the identical period the earlier year. Additionally, complete purchases on the cardboard jumped 15%, and purposes for the card soared by 153%.

JPMorgan Chase and Wells Fargo have followed UNFCU's lead, individually releasing their very own chip-and-PIN playing cards earlier this year. Like the credit union, the 2 banks targeted clients who're frequent travelers overseas and infrequently encounter issues using their mag stripe credit score cards.

Greater than 2.5 million EMV playing cards are expected to be launched to U.S. cardholders in 2011, in response to the Aite Group, a leading unbiased research and advisory firm centered on business, know-how and regulatory issues and their influence on the financial services industry. Its current research reveals an increased optimism about chip-and-PIN among card safety professionals in North and South America.

Nineteen % of those surveyed agreed that the credit card processing technology will migrate to the U.S. within the next 12 months or two; in a previous examine in 2009, nobody agreed. A much bigger share (73%) indicated that EMV has a high influence in decreasing fraud; two years in the past, only 48% thought so. Nonetheless, 55% of the respondents predicted that the replacement of the mag stripe will take seven years or more.

"Card trade executives consider that EMV within the United States is no longer a matter of if, however of when," senior Aite analyst Julie Conroy McNelley advised Digital Transactions, a publication that studies on traits in the fee processing industry. "The relevance of the magnetic stripe has disappeared."

Consumers and retailers, you've been warned.            

MF