USAA Answers To Chip Card FAQs

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There has been a lot of talk in our community about “Chip and Pin” cards and when USAA Bank would be coming on board with this advancement. I will be the first to admit that I had to do my own research on what the hype was all about, why it was a benefit specifically to military and in the area of security, why one would need such a card. That’s when I turned to the experts. I was able to reach out to subject matter expert USAA Director of Credit Card Product Development, Marisa Pruski who shed some light on the topic and gave me the basics that all of our community needs to know.


Tara: Marisa, let’s start at the very basic level – what is this new advancement all about?


Marisa: The most common form of fraud for payment cards (credit and debit) is counterfeit fraud, where the card information is stolen from the magnetic stripe and a false account is created and used in a fraudulent manner. Chip cards contain embedded microprocessors that provide strong transaction security protection and other features not possible with traditional magnetic stripe cards. Chip card technology provides an added layer of security to help minimize cardholder impact when a data breach occurs. While this technology can't prevent all security breaches, a chip card is an important first line of defense.


Tara: Our community members have heard chip cards referred to as “Chip-and-PIN” and USAA is offering such a product as just a “Chip Card”. Can you explain?


Marisa: Chip cards are an evolving technology.  Globally, Chip-and-PIN cards are common.  This card requires a PIN number to be entered in order for the transaction to be processed  Chip-and-signature cards, mirror the behavior of today’s credit cards in the United States, and simply require a signature to perform the transaction because all purchases can be authorized “live” and in real-time.  This was not true when this technology was first introduced in Europe, so PIN became a default requirement as it helped validate transactions where the merchant was not able to support processing live authorizations. This is not an issue in the U.S. as merchants are able to process authorizations live.    There are also contactless cards where the cardholder passes the card over the terminal, though this is not in wide-spread use at this time.  This technology will continue to evolve as mobile devices begin to play a larger role in the payment world.


USAA will issue signature preferring chip cards (chip-and-signature) to its members for broader acceptance in the United States.  However, it will also have PIN capabilities to allow members to perform cash advances or to complete transactions should a merchant require it.


Tara: Many in our community have been told to request such a card prior to a permanent change of station to an OCONUS (Outside the Contiguous United States) location. Why is that?


Marisa: Chip cards have been implemented in more than 80 countries around the world, with approximately 1.5 billion cards issued globally and 21.9 million terminals accepting chip cards at the end of 2011.  Having a chip card when living or travelling abroad will increase the likelihood of acceptance and help to minimize the potential of fraud.


Tara: What is the difference between the new Chip Card and my current debit or credit card?


Marisa: A chip card looks just like a traditional credit or debit card, but it contains an embedded microprocessor in the form of a small metallic "chip" that is visible on the front of the card. This technology provides strong transaction security features not possible with traditional magnetic stripe cards. The difference will be how to perform the transaction.  Instead of sliding or swiping the card as we do with magnetic striped cards, the cardholder will  simply insert and temporarily leave it in the terminal to allow for the reading of the information on the card.  The terminal will provide prompts, as they do today, to walk the cardholder through the transaction.


Tara: Will all merchants accept this type of card?

Marisa: It will take time for merchants to upgrade their payment terminals to accept chip cards. To ensure cardholders can shop where they please, USAA Bank’s new chip cards will also include a magnetic stripe. At merchants with chip-enabled terminals, simply insert the card into the terminal and follow the prompts to complete the transaction. At merchants without chip-enabled terminals, swipe the card and follow the prompts. For online purchases, enter the card information as you normally would. 

Tara: You mentioned a member advantage for personal security, USAA is member-owned, what does it mean to USAA on a larger scale to develop and offer such and advancement?


Marisa: When counterfeit fraud occurs on a credit or debit card, the issuer( USAA Bank), of the card is responsible for the cost of the fraud,  not the merchant or the cardholder, thus, increasing our operational costs and reducing our ability to better serve our members.   On October 1, 2015, the party, issuer or merchant, that has invested in chip card technology will be protected from the financial liability should fraud be committed.  If neither or both are compliant, the liability will remain with the issuer.  The member is always protected with our Zero Liability Policy. You must notify us immediately of any unauthorized use.


Tara: When will the new cards be available? To whom?


Marisa: USAA Bank will be converting almost 16 million credit and debit cards to the new chip card.  This process will take time.  Members’ credit cards will be converted starting late 2014 through early 2016.  Debit cards will begin in early 2015 and should all be converted by mid-2016.


Tara: Does a member need to apply or request this type of card?


Marisa: If you're currently using a magnetic stripe card in the U.S., keep using it as usual. There's no need to request a chip card, at this time, as they must be used at chip-enabled terminals, which are uncommon in the U.S. 


Tara: Where can our members go to find out more about the new USAA Chip Cards?