Community banks are about to get a little help with their transition to EMV chip cards — at least if they use payment services from the Independent Community Bankers of America’s ICBA Bancard subsidiary. The organization said this week it has pledged $600,000 to support its customers in issuing Visa EMV credit cards.
Under the program, banks will sign an agreement certifying that they’re issuing EMV cards to their credit-card customers. ICBA Bancard will reimburse $1 per Visa EMV card active as of the end of 2014, American Banker reported.
Visa provided most of the funding for the program, which is why it’s limited to Visa-issuing banks, but a deal with MasterCard to support its issuers is also under discussion. A deal for debit cards is also in the works, according to ICBA Bancard CEO Linda Echard.
The program is a positive sign for EMV adoption, which is expensive for both merchants and issuing banks. While merchants must replace point-of-sale terminals and make arrangements for EMV support from processors, banks face much higher costs per issued card — the physical EMV cards themselves cost $1.25 or more in quantity, compared with 25 cents for a traditional mag-stripe card, according to ROAM Data.
That’s a big part of why only 31 percent of U.S. credit-card holders and less than a quarter of debit-card holders had received EMV replacements for their cards by late January. After Oct. 1, card fraud liability falls on merchants if they don’t support EMV cards, and on banks if the cards they issue don’t support EMV.
“The underlying technology behind chip cards is not only an effective fraud deterrent, but could become a point of distinction among cardholders who travel abroad or are concerned about the security,” Echard said in a prepared statement. “By offering community banks fraud protection programs, ICBA Bancard is continuing to provide consumers with the peace of mind that their financial information is safe and secure at their local community bank.”