EMV Case Study: Silicon Valley Bank
Calif. Bank Says Chip & PIN Will Reduce Fraud
"I do believe that shift has begun," says Moudgal, who oversees global cards and merchant services for California-based Silicon Valley Bank [$19.2 billion in assets]. "Everyone wants to be in a much more secure environment. ... The mag stripe can be easily skimmed; the chip eliminates that."
But an orchestrated move to the Europay, MasterCard, Visa standard, better known as EMV, will require strong cooperation and collaboration among banks, merchants and regulators. To date, most U.S. efforts to push EMV have been isolated, spearheaded by individual institutions. [See EMV: U.S. Member Convenience Drives Change.]
But increases in card-skimming attacks waged against dated magnetic stripe technology have garnered attention from security experts. The ID theft bust in Queens, N.Y., which resulted in the arrest of 111 suspects allegedly connected to a $13 million international card-fraud scheme that hinged on mag-stripe vulnerabilities, is just one in a growing number of examples that highlight why the United States needs to make an EMV move.
Card brands are getting behind the movement as well. Visa's recent announcement to support EMV in the U.S. will undoubtedly motivate U.S. card issuers. And MasterCard's support of EMV enablement for ATMs is another supportive step pushing card issuers toward chip & PIN acceptance, says Gartner analyst Avivah Litan.
"Other card brands need to do the same thing," she says, "in order for the global card industry to finally eliminate the Achilles heel of the card industry - magnetic stripes on the back of the cards."
SVB's EMV Shift
SVB is the first U.S. commercial bank to initiate an EMV card rollout. EMV development efforts began during the summer 2010, and in June the bank started transitioning its elite business cardholders over to chip & PIN."We began mapping a strategy to be the first commercial bank in the U.S. to roll out EMV," Moudgal says. "We want to bring a robust technology to the marketplace."
SVB is working with smart-card provider Gemalto for the program, which for now is targeted toward SVB's more affluent clientele, C-level executives who travel overseas. The bank also opted not to issue separate cards for international and domestic use. The bank wants the cards to be ubiquitous.
"We wanted our cardholders to have the ability to make payments using the same card," whether in the U.S. or overseas Moudgal says. "When in Europe or Asia or other EMV regions, they were having experiences that were not very pleasant, when it came to the merchants they do business with."
But it's not just about customer convenience. Security is just as, if not more, important.
A U.S. migration will be an expensive proposition, but all U.S. issuers and merchants need to rally behind the effort. To keep costs down, Moudgal suggests banking institutions explore migration options by talking with network providers and processors. He also suggests talking with clients, to gauge how much interest they have in a new card technology.
"Those who travel internationally quite a bit are probably seeing their cards rejected or are just having experiences that are not so pleasant," and that may mean a migration for certain portfolios should come sooner rather than later.
The biggest advantage to keep in mind: reducing fraud. "With the U.S. being so behind this [EMV] technology, much of that [card] fraud is going to centralize in the U.S.," and recent events prove it already has, Moudgal says.
"If you look at what has happened in the U.K., the EMV program has had tremendous success in reducing losses in card fraud," he says. "Fraud losses have fallen generally. ... Losses have fallen in other parts of Europe and Asia, too, where EMV is used."
