Industry News

30/09/2011 - The tools merchants in the U.S. have to process credit cards - and the cards themselves - are different from those widely used elsewhere in the world, and that is creating more of an issue for retailers and consumers everywhere.

Because most U.S. point-of-sale terminals are not equipped to read EMV, or chip and pin, cards, foreign visitors sometimes have issues making purchases. The same goes for U.S. tourists traveling overseas, as their magnetic stripe cards are often incompatible with international retailers' credit card terminals.

Reuters reports that card companies are starting to tune into growing dichotomy between U.S. and international payment processing systems, and are taking steps to correct it.

Dan Ray, the CreditCards.com editor, told Reuters that "after years of tinkering with the idea, it looks as if the card industry is finally migrating toward chip-embedded cards." For instance, Visa plans to bring out a microchip-based card and may include incentives to encourage American adoption, the source says.

A movement to bring EMV cards into the mainstream in the U.S. economy is slowly gaining steam, with groups such as the SmartCard Alliance leading the charge to facilitate EMV-chip and mobile payments.

The group recently issued a white paper discussing the future growth of mobile payments in the U.S., and says m-payment volumes could be valued at $214 billion by 2014.

"Technology is always changing, especially within the mobile and payments industries, so it is difficult to predict when and how mobile payments will become commonplace in the United States," stated the executive director of the Smart Card Alliance, Randy Vanderhoof.

Card issuers and banks are also jumping on board with EMV chip cards. Fiserv said it would start issuing chip payment cards that follow the EMV standard.

"Increasingly, U.S. travelers abroad find that their magnetic stripe bank cards are rejected," states Fiserv's president of output solutions, Jorge Diaz. He said this problem can end up creating an "embarrassing and compromising" situation, adding that EMV chips offer "greater convenience and merchant acceptance, (and) cardholders may also benefit from reduced card fraud."

The CPI Card Group also announced in mid-September that it is collaborating with U.S. banks and credit unions to introduce the cards to the U.S. market.