By Render Dahiya
The EMV liability shift is fast approaching, leaving card issuers and customers alike watching closely to see how the transition plays out and what’s next.
The rumor mill has steadily created some misunderstandings about the EMV liability shift, and we’d like to take the opportunity to debunk the four we’re hearing most often:
1. Target marketing and personalized cards are cost prohibitive with EMV. We’ve all heard about the increased cost to put a chip into each card. And it’s true, the physical cost of an EMV card is significantly more than magnetic stripe cards. And when they sit in inventory, EMV cards have a two to three year shelf life based on card expiration dates and chip expiration dates, with a much higher spoilage price tag than traditional cards. And it’s because of these costs that card issuers and program managers should not let EMV cards sit in inventory, and actually save money by increasing targeted marketing and personalization. Producing bulk quantities of generic cards is akin to the old “spray and pray” marketing approach that floods the market with materials – much of which will never be opened or used. The cost of EMV quickly makes the business case for on-demand card production, which eliminates expensive inventory costs, spoilage and low customer adoption rates.
2. EMV is a “one and done” project. Many banks are approaching EMV as a “one and done” project when it’s anything but. Financial institutions in particular need to keep the bigger picture in mind, as you have the most to lose, in the form of customers, deposits, and revenue. Our research shows that 61 percent of consumers still haven’t received an EMV card, and 65 percent don’t know how to use one. Now is the time to improve customer retention and loyalty to grow revenue. Make sure you are maintaining, and not sidelining, key marketing strategies. Use the EMV touch point to reconnect with customers by offering a more personalized cardholder experience or introducing new services. So what’s a card issuer to do? Check out our EMV Strategy Whitepaper for more ideas.
3. Our customers know what’s happening. In our recent survey of more than 1,000 Americans, 73 percent reported that they have not received communication regarding the EMV shift from their current financial services provider. This number looks pretty bleak when you couple it with the number of credit and debit cards in the market today. Now is the time to reengage with customers to ensure that they will remain your customers for years to come. Your competitors are looking for an easy way to snap up your unhappy customers during the EMV liability shift. Educating consumers is a great way to keep your customers happy and informed. For ideas on how to best educate customers, click here.
4. Plastic cards will be obsolete soon anyway. There’s no need to switch to EMV. These days, it seems as if mobile payments are all the rage, and everyone is on the mobile payments bandwagon. In fact, the exact opposite is true. According to Gallop, only 13 percent of U.S. adults with a smartphone have a digital wallet on their device. Of that number, 76 percent have very rarely used it to make a purchase from a retailer in the past 30 days. Yes, consumers have a more heightened sense of awareness about mobile payments and Apple Pay in particular, which uses your existing credit card data to make payments. However, even the most devoted brand follower knows that iPhones are not perfect – nor are humans or point of sale equipment. The chance of a software or hardware glitch, a dead battery, an accident involving your phone and a glass of water, and countless other mishaps makes it unlikely that even the most committed Apple Pay users will be able to completely abandon their physical cards anytime soon.
As you prepare for the EMV liability shift, don’t overlook any detail or think it too small. While it may feel overwhelming to uncover the truth, it’s a critical step in ensuring a positive, effective, and efficient transition to EMV.