Many credit card users in America have realized the hard way that the cards they have do not work in crisis situations abroad. A good example is the automated kiosks in Europe where the credit cards with micro-chips carried by Europeans work well. A massive 10 million credit card holders in the country have suffered from acceptance problems with the card in 2008. This has cost the banks slightly less than 450 million dollars in revenue lost. The reason for this problem is the fact that US hasn’t still accepted what you would call the EMV standard.
The standards are managed by the EMVCo formed more than a decade ago by Visa, MasterCard and he Europay. The latest of the converts to this standard is Canada, where merchants have been asked to get all the required hardware in place by March of next year. EMVCo reports suggest that there are in excess of 1 billion credit cards in the world following the MEV standards. These chip cards are less vulnerable to frauds. While the magnetic stripe on normal credit cards has data which is encrypted but static over the transactions, the EMV card has a digital signature which is specific for every transaction and owes itself to exchange of data between the card and the card reader.
According to reports, the issuers of credit cards in the country have stayed away from adopting these standards because of the greater cost involved, which might exceed the savings due to avoiding frauds. The amount of lost revenues due to frauds in credit card industry is about 900 million dollars for US banks which issue MasterCard and Visa credit cards. This amount though is only 0.1% of the total card expenses of the credit card customers. Another reason for not accepting these changes is because these changes might be outdated in a short time by various other technologies. The UN Federal Credit Union was the first of the financial institutions that switched to the new EMV standards and sent 5000 cards on October 18th to some of the richest members. These standards are quite helpful for the simple reason, that it will help fight frauds in credit card industry. They will also enhance the acceptance of the credit cards outside the country. This is quite valuable for the sheer reason that credit card customers do not want to find their cards not being accepted when in a crisis during a vacation.