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finance & strategy
The EMV Experience: Focus on Prepaid
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Study, the majority of financial in- stitutions—86 percent—said they plan to issue EMV debit cards with- in the next two years, with most aiming to shift their debit portfolios to EMV beginning next year.
“It’s no secret that fraud moves
to the weakest link,” warns Mark Putman, senior vice president of prepaid solutions at First Data. According to Putman, the broad shift to EMV for U.S. credit, debit and prepaid cards will take place over the next several years, though it will likely occur in stages, be- cause of the market’s large size and diversity.
Credit card issuers are in the lead
in the U.S. chip-card migration, be- cause they represent a broad and immediate target for fraudsters, and the migration path is somewhat simpler than for other types of cards. Debit issuers initially faced technical complications in mapping their EMV shift, because of the Durbin Amendment’s requirement— unique to the U.S.—to provide at
least two competing debit network options for each chip card. But debit industry players this year hammered out solutions to that challenge, and many debit net- works are now moving ahead with appropriate technology and agree- ments in place to process debit EMV transactions.
EMV Prepaid Card
Roadmaps Emerge
The roadmap for EMV prepaid cards, too, is coming into focus— albeit more slowly. Major prepaid card issuers, processors and program managers are evaluating their plans for adopting EMV, based on their unique needs and business considerations. Reload- able prepaid cards that routinely carry higher balances will be
first to make the shift, industry experts believe.
“GPR cards, travel cards and pay- roll cards will migrate to EMV,” Bastian Knoppers, senior vice president of output solutions at FIS, tells Paybefore, adding it is too
early to say precisely when the majority of prepaid cards will convert to EMV. It will be two to three years before the majority of U.S. credit cards are converted to EMV, he estimates.
But within the next two years,
the EMV conversion for debit and credit cards, as well as reloadable prepaid debit products such as payroll, government benefits and GPR cards, will rapidly accelerate, Diane Jackson, vice president of strategic marketing for CPI Card Group, tells Paybefore.
Debit cards exposed to data breaches:
2012 2013
5% 14%
source: PULSE’s 2014 Debit Issuer Study
By 2016 the “prepaid EMV early adopters” among payroll, gov- ernment disbursement and GPR cards will be well along in the con- version process, Jackson forecasts. By then U.S. card manufacturers like CPI should be well-entrenched in EMV card production and ready for further uptick in demand, she adds.
Perfect Plastic Printing, a St. Charles, Ill.-based card manufacturer, has seen a dramatic increase in demand for EMV cards this year, according to Chris Smoczynski, president.