It is only during emergencies or calamities that one gets stuck with the most unthinkable situations. The eruption of the Eyjafjallajokull volcano for instance, stranded passengers for several hours. European travelers as well as other foreigners were stranded because they were unable to use their cards to buy fresh tickets from automated kiosks. The reason - the kiosks did not accept the magnetic stripe cards. They only accepted chip embedded cards. In situations like this, cards that are issued by U.S. banks do not work abroad and this could be a devastating experience for most travelers who get stuck in unfortunate situations such as these.
The American banks lost huge revenue due to the decline of these cards abroad. About 10 million U.S. customers experienced difficulties due to the decline of their cards abroad and the banks lost revenue up to a tune of about $447 million. Unlike the European countries U.S. is one of the developed nations that are yet to adopt the new technology (EMV).
In 1999 EMVCo was formed (by Visa, MasterCard & Euro pay) and the EMV standard is maintained by the company since then. Canada has recently converted to this technology and March is the deadline for merchants to incorporate the same.
These microchips are fraud resistant as the technology is far more advanced. Here with the EMV card the data changes with each transaction unlike the magnetic stripe cards. The microchip from the card exchanges data while the card is used and thus produces a signature that is unique with each and every transaction.
These cards cannot be duplicated and the transactions are far more secure. Each card has its own unique configuration. However, card companies in the U.S. are not keen to embrace this technology because it is much more expensive than the magnetic stripe card. The cost to revamp the old to the new technology might prove more costly than the losses due to fraud. While the U.S. banks have written off about $900 million in fraud in the last year alone, the reluctance is also partly because there might be newer technologies in the future.
The U.N. Federal Union was the first institution which made a switch to the EMV technology, sending around 5,000 cards to its top members. Since the Credit Union has about 90,000 members, mostly diplomats who are frequent travelers, these cards might prove useful in the future. Halpern, Services Manager was quoted as stating that this trend would hopefully catch on in the future.