Security, Costs Weigh on Issuers as They Ponder Their EMV-Issuing Strategies: Report

Payment card issuers considering the conversion of their credit and debit cards from magnetic stripes to EMV chip cards need to consider not only the cost, but the security and reputational factors of doing so, says Computer Services Inc., a banking-services company.

In its new “The Road to U.S. EMV Migration” report, Paducah, Ky.-based CSI says that as consumers increasingly learn more about EMV, and how it can help reduce counterfeit card fraud at the point of sale, they may seek out EMV cards. “These customers will be more likely to reach for their EMV-enabled cards more often than their non-EMV cards, even if they are using them at terminals not yet equipped for EMV technology,” the report says.

Though a number of larger issuers, such as Bank of America Corp., have announced their chip-issuing plans, many, of all sizes, have not. Part of the reason may be cost. Many issuers are choosing to issue chip cards as current ones expire, CSI says. That spreads out the costs.

In its report, CSI estimates that an issuer’s EMV-related setup costs range from $5,000 to $10,000. That does not include the $3 to $7 price for each chip card. CSI also estimates ongoing fees for $50 to $250 in monthly support costs per issuer and 0.5 cents to 5 cents for EMV cryptogram validation costs per transaction.

Issuers also face costs in redesigning their cards to accommodate the chip. The inclusion of the chip can shrink the amount of space allotted on the front of the card for the issuer’s brand.