Frequent Spenders First to Receive EMV Credit Cards

By Kery Murakami
Oct. 2 — Banks prioritized customers with the most heavily-used payment cards as they rolled out fraud-preventing EMV chips, a Visa executive and an industry analyst said, prompting questions about whether higher-income people are receiving greater privacy protections.

Speaking at a forum Oct. 1 on the Europay, MasterCard and Visa chips, Kimberly Lawrence, Visa's head of North American operations, said issuers offering EMV cards “have prioritized their portfolios based on who's spending the most. They're kind of optimizing their investments.”

A Citi spokeswoman denied a link between spending and how the bank has distributed the EMV card, while other banks declined to detail how they've prioritized distribution of the technology.

Aite Group Research Director Julie Conroy, though, said bank officials have told her they have distributed EMV-protected cards based on spending. Banks initially prioritized their international travelers for their first rounds of EMV issuance because of the difficulty in using old magnetic-stripe cards abroad, she said in an Oct. 2 e-mail to Bloomberg BNA.

“As banks began mass issuance of EMV, many of the banks I've spoken with prioritized their most active users of cards for reissuance, since these cardholders naturally represent the most exposure,” she said. “This roughly translates to consumers with higher net worth, since they'll be spending more on an aggregate basis.”

Consumer groups were split on the impact. “All card-using consumers should have the benefit of more secure chip-enabled cards. Lower-income consumers should not be treated as second-tier customers,” Christina Tetreault, a staff attorney with Consumers Union's financial services program, told Bloomberg BNA in an Oct. 2 e-mail.

Other consumer advocates, though, were less concerned, saying victims of fraud involving counterfeited cards are reimbursed by either their bank or the merchant. Linda Sherry, Consumer Action's director of national priorities, said the EMV distribution approach appeared “reasonable” because “high spenders tend to have high credit limits. So if someone clones (counterfeits) their cards, the damage will be very high, as opposed to those with smaller credit limits.”

Still, she said having to get a replacement if a card is counterfeited could be more of a hassle for low-income people, who are more likely to only have one credit card.

A change in the policies of card providers Oct. 1 shifted the liability for fraud involving counterfeit EMV cards from banks to retailers, if those merchants do not have chip readers(191 BBD, 10/2/15).

Survey Results

Lawrence and Conroy's comments track with the results of a survey released this week, which found that credit card holders with annual incomes of more than $75,000 are more than twice as likely to have an EMV card than lower-income people.

The finding was based on a survey of 2,004 people by Princeton Survey Research Associates International, conducted Sept. 3-6 and again Sept. 17-20, with a margin of error of 2.7 percent.

Lawrence's comments came at a forum organized by the Electronic Transactions Association (ETA), as she discussed the pace of implementing EMV chips in the U.S.

While the 200 million chip cards Visa expects to have distributed by the end of the year represent 30 percent of its cards, a more important factor in judging the EMV migration's effectiveness is “payment volume,” Lawrence said Oct.

1. Visa credit cards with EMV chips represent more than 60 percent of the total credit card payment volume, she said.

Lawrence later said in an Oct. 2 statement to Bloomberg BNA, “We have seen that banks are focused on first bringing chip technology to the cards that are mostly likely to be used.”

In an Oct. 2 e-mail to Bloomberg BNA, Citi spokeswoman Emily Collins denied income or card use has been a factor in distributing EMV cards,

Currently, all of Wells Fargo's reissued credit cards have chips, and since last November, all new accounts have received EMV cards, bank spokeswoman Natalie Brown said in an Oct. 2 e-mail to BNA. Bank of America did not comment.

International Travelers

JPMorganChase initially prioritized issuing chip cards to those who travel internationally “because there was no reason of issuing more broadly in the U.S. when businesses didn't have point-of-sale EMV chip terminals in place,” company spokesman Edward Kozmor told Bloomberg BNA in an Oct. 1 e-mail.

Kozmor declined to say how Chase has prioritized the issuance of chip cards since then, saying only, “our priority is to get EMV chip cards in the hands of all of our cardholders.” He also stressed that counterfeiting victims are reimbursed, regardless of the card type.

Others said the desire of international travelers may have had an impact on those customers receiving EMV cards first. senior industry analyst Matt Schulz in a Sept. 29 interview with Bloomberg BNA said higher-income people are more likely to travel and abroad and to reach out to get EMV cards from banks as they became available.
Carolyn Balfany, head of MasterCard Worldwide's U.S. product delivery group, said at the ETA event, that banks decided “to migrate the cards that have the higher propensity of fraud.”

Asked to elaborate, MasterCard spokeswoman Beth Kitchener e-mailed Bloomberg BNA Oct. 2, “U.S. banks and credit unions first started issuing chip cards to international travelers, which did include affluent cardholders.”

To contact the reporter on this story: Kery Murakami in Washington at
To contact the editor responsible for this story: Seth Stern at