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« Imitation over Innovation: Why Getting Value Out of Innovation is Easier than You Think | Main | With-Share-of-Wallet Strategies, “God is in the details” »

No Chip, No Service

By Lisa Hochgraf

Thanks to CUES' amazing workplace flexibility and colleagues willing to work creatively to get the July issue of Credit Union Management out on time, my husband, son and I were in The Netherlands and Germany in early June, and in Europe the entire month.

While I wasn't required to work while I was away (thanks again, everyone!), I thought you might be interested to hear about how difficult it was to use our magnetic strip Visa card in The Netherlands. In two restaurants and two grocery stores, the cashiers have told us that the chip card is the only kind accepted. 

My husband is a clever guy and so he was able to look at the card device in the restaurants and put together how it could be used for just a regular old U.S.-style swipe. And that sufficed, but not without one waitress explaining to him that it was illegal for them to swipe the magnetic stripe cards, and—besides--with just the mag strip card, we were at much higher risk of skimming. In the groceries, we gave up and used cash. (Although we later discovered that we couldn't use an ATM without a chip card, either. Fortunately we didn't run out of cash before we headed for Germany.)

From working on past articles about EMV ("Europay, MasterCard and Visa") cards (read them here and here), I knew something about chip cards being prevalent in Europe and nascent in the United States. Please note that all of this is no ding to our current credit union's card, which we happily carried because of its friendly-to-travelers fee schedule and the institution's always awesome customer service.

But what an interesting example of why U.S. credit unions might want to start offering EMV cards to members—especially those members who travel. $3.6 billion United Nations Federal Credit Union, Long Island City, N.Y., has already done so; $48 billion Navy Federal Credit Union (on Navy FCU's site, see the link about "Using check cards worldwide") was piloting its program when our writer talked to them for the aforementioned story in the July magazine; and credit union service organization PSCU has just announced a prepaid chip card offering for client credit unions.

Offering chip cards is definitely something to look at if your members travel, even before 2013, when MasterCard will require acquirers (merchants’ financial institutions) to have systems that can handle EMV transactions. Today already, members can enounter circumstances of no chip, no service. Oh yeah, and then there's that part about the better protection from skimming, too.

Lisa Hochgraf is a CUES editor.

Learn more about the CUES School of Consumer Lending, to be held in September near Chicago.

Learn more about EMV at CUES' CEO/Executive Team Network, slated for Nov. 4-7 at the Ritz Carlton Palm Beach. John Ainsworth, group head, U.S. markets, MasterCard Worldwide, will present "EMV–The Catalyst for a New U.S. Payments Ecosystem."

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