State Employees’ Credit Union (SECU) recently became one of the first financial institutions in the country to implement EMV card chip technology. SECU Senior Vice President of Card Services Leanne Phelps talks about the driving factor to incorporate EMV at a time when many U.S. banks and credit unions are maintaining the magstripe.
PYMNTS.com: Please give our audience a little background on SECU and its cardholders.
LEANNE PHELPS: SECU is a non-profit financial cooperative owned by its members. SECU has been providing the employees of the State of North Carolina and their families with consumer financial services for over 70 years, currently serving more than 1.6 million members. SECU provides services through 236 branch offices, nearly 1,100 ATMs and 24/7 Contact Centers. SECU has an active Debit Portfolio reflecting 950,000 traditional Visa check cards and 16,000 Cash Points Global cards, which is also a Visa check card and is the primary access tool for a controlled spending account.
PYMNTS: Why did SECU decide to include EMV technology in its debit card portfolio?
PHELPS: Several reasons:
– We have begun to hear problems from our traveling members that merchants did not want to accept their mag stripe only cards. The EMV technology will provide problem free acceptance international operability. Our Cash Points Global card product is offered in lieu of travelers checks. Therefore, it was a logical approach to convert this portfolio to chip first.
– Position the SECU card portfolio as unattractive to the fraudsters. We believe that as the rest of the world continues the migration to chip, most specifically Canada and Mexico, more and more fraud will move into the United States. Counterfeit losses already reflect the biggest area of exposure to our members. In 2010 alone, we experienced nearly $1,000,000 in counterfeit losses but were able to block and prevent a third of that amount.
– Skimming reports in 2010 continues to be a growing concern with smaller merchants, at ATMs and with individual consumers. Chip will provide for dynamic data and in time will become a valuable tool for protecting against counterfeit.
PYMNTS: Why did SECU select Oberthur Technologies as its partner for this venture?
PHELPS: SECU has used Oberthur for card personalization for many years. Being a European company, they had the experience and expertise to be a good partner in this project.
PYMNTS: Do you expect more financial organizations to implement EMV in the United States, and if so, what type of timeline are we looking at?
PHELPS: Of course, we certainly hope so. It is a chicken-and-egg scenario. Cannot predict a timeframe!
PYMNTS: EMV technology has been slow to catch on in the payments industry here in the United States. Why do you think that has been, and is that of concern to SECU as it moves forward with its EMV initiative?
PHELPS: In my opinion, the U.S. payment network and infrastructure is very mature, predominantly online and millions of terminals deployed. Over 60 percent do not currently contain PIN pads. The cost for merchants to upgrade hardware and software will be big. Efforts for issuers to implement can also be daunting as well as expensive. However, I now understand that the major terminal manufacturers are shipping predominantly chip-enabled terminals, so that hardware refreshes will occur sooner than later. Several big merchants – Wal-Mart, Home Depot – have come out in support of contact and contactless payments and are currently reading their systems with upgrades. Once the big merchants are on board, I believe we will see more issuers come on board, too. The chicken and the egg!!
PYMNTS: In addition to EMV, what other technologies should financial institutions explore in order to provide the highest level of security for cardholders?
PHELPS: I believe mobile and NFC payments will be the next big wave. Combination contact and contactless cards will expedite the mobile channel. Dynamic data in a real-time authorization will be critical for all parties in the payment channel.
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Leanne Phelps, CCUE
Senior Vice President, Card Services
State Employees’ Credit Union
Leanne has 31 years experience at State Employees’ Credit Union during which time she has held different roles including managing all operations and delivery of the Credit Union’s debit, prepaid and credit card programs to 1.5 million cardholders. Direct responsibilities also include product and operational management of SECU’s ATM network consisting of 1100+ ATMs throughout the state of North Carolina. Leanne is a member of SECU’s Technology Steering committee that is responsible for reviewing and analyzing all new technology and project initiatives for the Credit Union. Leanne also serves on various advisory board and focus groups for Visa, PSCU and Diebold.
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