VOL. 130 | NO. 72 | Tuesday, April 14, 2015

When it comes to banking innovations, 2015 is increasingly looking like the year of the chip card.

Spurred in part by the growing wave of data hacks and security breaches, banks nationwide – along with a growing number in Memphis – are moving to adopt a new version of plastic for consumers.

The technology de-emphasizes and eventually eliminates the magnetic strip on the back that stores user data. The new cards are embedded with EMV (which stands for Europay, MasterCard and Visa) chip technology that, according to the Smart Card Alliance, contains embedded microprocessors that support “enhanced cardholder verification methods.” The microprocessors generally are regarded as more secure for online purchases and other activity.

Cards that include EMV chips store encrypted payment information in a secure chip rather than on the magnetic stripe. The uptick in this migration is in response to an Oct. 1, 2015, deadline set by card processing companies in an effort to steer U.S. banks to the more secure cards.

Magna Bank is one local institution that is heading in this direction. It has a broad slate of technology and information security projects teed up for 2015.

Magna says more details are forthcoming, but for now they include person-to-person payments, website upgrades and a transition to EMV-chipped debit cards.

First Tennessee Bank is following the same path.

Toward the end of last year, Memphis’ largest bank announced that it would offer chip-based cards; it plans to introduce the EMV cards this year.

Last year, First Tennessee launched leading-edge payment capabilities such as ApplePay and instant issue of debit cards in First Tennessee branches, said Dave Miller, the bank’s head of consumer banking.

“Continuing our investments, we anticipate issuing chip-enabled (EMV) credit cards in mid-2015 with debit cards shortly thereafter,” he said. “This will include new cards and the replacement of existing client cards as they expire.”

First South Financial Credit Union started rolling out its line of EMV credit cards to customers toward the end of 2014. Starting Oct. 1, the Memphis-based credit union began offering Visa Platinum credit cards with EMV chip technology, and it’s expanding that launch in the coming months.

“We’re rolling out our EMV-chipped debit cards in May, and our EMV-chipped business credit cards in July,” said First South Financial senior vice president of marketing Delynn Byars.

Among the enhancements made possible by the technology is the personalization of EMV cards, which is done using issuer-specific keys. According to the Smart Card Alliance – an industry group focused on smart card technology – it’s virtually impossible to create a counterfeit EMV card that can be used to successfully conduct an EMV payment transaction.

Also according to the Smart Card Alliance, big financial institutions like American Express, MasterCard and Visa already have laid out their roadmaps for moving to EMV technology in the U.S.