Is the Tipping Point Nearing? EMV Enabling Loyalty Benefits at Last in the US?

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Rising fraud? Playing catch-up with international standards for US travelers abroad? Conforming with our North American counterparts in Canada and Mexico? Bowing to retailer’s demand for more protection against fraud at point of sale?

Those are just some of the reasons that EMV compliance may be closer on the horizon for US financial services providers than previously predicted by analysts and industry experts.

But the announcement by a third US credit union that they intend to adopt the EMV standards before they are mandated in the US have the team at COLLOQUY excited for an entirely different reason. The latest EMV entrant in the US is the North Carolina State Employees’ Credit Union. Starting next month, they will migrate their 1.7 million debit cards from a traditional magnetic-stripe design to the chip-based EMV design that much of Europe, Latin America and Asia Pacific have been adopting.

So why would the loyalty marketing team at COLLOQUY care about this development? That part is simple – it is all about a better loyalty “device”. Since the beginning of loyalty marketing, it has been necessary to have some sort of device to identify customers and seamlessly track their behavior. But, the promise of EMV-based cards for the loyalty marketing industry is that we can have a smart device that enables soft benefits and surprise-and-delight elements for credit card and debit card users. Those might include anything from the ability for the EMV chip card to store our personal preferences so that they are instantly recognized and rewarded when we check out at our favorite retailer. It could also include relevance-related data points to ensure that the messaging we receive by store associates or on our retail receipts aren’t just mass-targeted offers.

The ability to augment the ability of the legacy-based POS network in the US to provide customization and relevance is an opportunity worth dreaming about. And believe us – we at COLLOQUY have dreamed about this for the last 10 years or so. That is why these small, early adopters among the financial services institutions in the US have us cheering.

Now – many of you will argue that smart phone technology has already leap-frogged the capabilities of a chip-based credit or debit card. You may be right about that.

But, until smart phone adoption reaches critical scale … until mobile payment technology is no longer just a dream talked about among marketers in financial services circles … there is a “sleeper” in our midst. It may very well be the steady creep of credit unions and similar regional providers like the North Carolina State Employees’ Credit Union, United National Federal Credit Union and Travelex Currency Services Inc. that tip the scales to enable EMV protections – and loyalty program related benefits and services – to the general population of the US.

What do you think? Do you think that smaller institutions like these FSIs can lead the way in the US?

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