EMV Chips Creep into US Credit Cards

American credit cards come with the characteristic magnetic stripe verification system, but the rest of the world has long since moved on. Europe, and a good portion of Asia, Latin America and Africa, use chips embedded into the credit card along with a PIN to guard against fraud. These chips, called EMV chips for Europay-MasterCard-Visa, are widely considered to be safer than the mag-stripes seen in the US.

And American credit card users have suffered more than just higher fraud rates: many international travellers have seen their credit cards rejected because the European restaurant, store or kiosk doesn’t have the infrastructure for magnetic stripes. Now, finally, big-name players in the credit card arena are easing EMV chips into the domestic market.

The early adopters
A few scattershot banks and credit cards currently carry EMV chips, though they’re offered to select audiences with deep pockets. US Bank’s FlexPerks Travel Rewards Visa is EMV-compatible, as are Wells Fargo’s new Visa card, Chase’s Palladium and JP Morgan Select cards, and some cards issued by Raleigh-based State Employees’ Credit Union. One of the earliest movers was the United Nations Federal Credit Union, whose members, not surprisingly, often travel abroad.

The rest of the American financial industry, however, has been slow to pick up on EMV technology. Despite the prevalence of travel credit cards – and issuers’ willingness to bend over backwards to attract customers – very few offer technology that the rest of the world uses. The Chase Sapphire, for example, markets itself as a high-end travel credit card, yet could easily be denied at many European restaurants. Thankfully, more mainstream issuers are stepping up.

Visa’s plan to bring America up to speed
Visa hopes to increase its dominance in the payment processing industry by jumping on new technologies, namely NFC and EMV chips. “By encouraging investments in EMV contact and contactless chip technology, we will speed up the adoption of mobile payments as well as improve international interoperability and security,” said Jim McCarthy, Visa’s global head of product, in a press release. “NFC mobile payments and other chip-based emerging technologies are poised to take off in the coming years.”

Beginning in October of 2012, Visa will provide incentives to merchants whose payment terminals will accept NFC chips. By April of 2013, all merchants must be able to process chip technologies. Visa has a similar incentive structure for merchants to accept EMV chips, building on an international effort.

Citi offers EMV-compatible corporate cards
Citibank recently announced that it would issue business credit cards with EMV chips to American corporations. “Many of our clients are leading multinational organisations with cardholders that travel extensively,” said Citi’s Julie Monaco.

Citi’s business cards are the second round of internationally viable credit cards. The first credit card with EMV technology, launched just last month, was the Executive AAdvantage World MasterCard, an international credit card aimed at affluent cardholders.