By Ray Birch
DES MOINES, Iowa—If credit unions want more reasons to move early to convert the card base to EMV—in addition to the growing number of data breaches—the availability of EMV card stock could be one.
Some analysts predict the time it takes issuers to place an order for chip cards and then have the plastic delivered from manufacturers will lengthen—possibly extending to eight months as FIs get off the fence in early 2015 in preparation for the October 2015 liability shift away from the merchants and toward the issuing institutions.
Brian Scott told CUToday.info that chip card makers are already backed up with big orders from major issuers, noting that at present it is taking about six months to get EMV plastic.
“And I think these timeframes could start going up after the beginning of the year,” said the VP of sales at The Members Group. “I think they could hit seven to eight months. I believe we will see a big rush of issuers begin to convert to EMV in the early part of next year.”
Scott does foresee an ebb and flow in plastic production, with card manufacturers catching up a bit on the demand to shorten production times by the end of the year.
“But again, I see the timeframe rising sharply in 2015,” offered Scott. “We have been advising our clients that even if they don’t want to roll out their EMV program until October 2015 to start ordering plastic now.”
Don't Get Caught Off-Guard
Scott warned CUs not to be caught off guard.
“A lot of processors are saying they can have the credit union up and running on EMV in 90 to 100 days, which is realistic. However, if you don’t have the plastic, nothing else really matters.”
A source close to credit unions and card makers sees more of a problem for CUs than big banks. Asking for anonymity, he stated that most of the major issuers have already placed their chip card orders, so they will be fine.
The analyst is concerned, however, for many of the smaller issuers still waiting to pull the EMV trigger, saying that when they do next year they will likely face a plastic bottleneck.
Julie Conroy, research director, retail banking for the Aite Group in Boston, is hearing two different stories about chip card stock availability—one from card producers saying all is OK, and another from issuers who are worried about the availability of EMV plastic next year.
“The manufacturers have assured me they are ready for the spike,” said Conroy. “And then I talk to issuers and some are making concerted efforts now to get in their orders in early because they fear we are going to see an issue.”
Al Vrancart, industry advisor and founder of the International Card Manufacturers Association in Princeton Junction, N.J., told CUToday.info that card makers have been preparing for the liability shift deadline for some time.
“There are eight or nine Visa- and MasterCard-approved manufacturers in the U.S., and several of the top-tier companies are global,” noted Vrancart. “These guys have a lot of equipment and they have produced plastic for the conversions in Europe, Latin America and Canada.”
Vrancart said the U.S. card makers in preparation for increased card requests, have transferred equipment from overseas to handle the demand.
“So there is plenty of capacity to produce almost a billion cards that will have to be put out over the next couple years,” said Vrancart, noting that issuers will not hand out EMV plastic to all of their cardholders by the October 2015 deadline.
Similarly, Robert Hackney, president of CSCU in Tampa, Fla., does not foresee issues for credit unions, saying, “We have not heard about any problems from the card manufacturers.”
But while Vrancart does not see chip plastic distribution as an issue next year, he is not so sure about the card personalization step.
“Personalization—loading account numbers and placing personal data on the cards could be a little bottleneck,” he said, noting that not all of the card producers handle personalization.
Feeling the Strain
What could complicate matters next year, analysts add, are more large data breaches and the reissuance that follows.
TMG’s Scott said the strain would be felt by card makers not only from the large number of compromised cards replaced, but also from issuers seeing the breach as a clear sign to move more members to EMV.
Conroy agrees, saying FIs could move up the timeline for some cardholders scheduled to receive EMV over the next year or two. “You might then see issuers move up the buckets of consumers not scheduled to receive EMV by October 2015, so you would see EMV issuance accelerating.”
And as to the likelihood of big breaches occurring that could throw a wrench in the card production process, Conroy pointed out: “Didn’t we just have one?”