The Secret Facility Behind the Credit Card Revolution

Outside of a large, windowless industrial building in the Denver suburbs, you won’t find any fancy signs describing its latest tenant. Its entrance is unmarked, and a camera is trained on whoever dares to press the call button next to a blacked-out door. If you are an invited guest, and you do make it inside the facility, you will find a comfortable reception area that belies the sparse neighborhood occupied by other light industrial businesses.

A man behind a mirrored glass window speaks through a microphone, requesting that you place your identification into a stainless steel drawer. He then requests that you look at a camera so he can take your photograph.

This is the new facility for CPI Card Group, the largest manufacturer of credit cards in North America, where a big shift in credit card technology is happening.

Security Is the Name of the Game

With an ID badge in hand, I am greeted by my host, Andy Sappenfield, VP and General Manager of CPI Card Group. Sappenfield is clearly excited about this brand new facility, which CPI has constructed to meet the needs of card issuers, retailers and consumers who are demanding the accelerated deployment of the next generation of smart-chip-enabled cards, in light of the recent high-profile security breaches at Target and other prominent retailers.

These new cards will make it much harder for criminals to steal credit card numbers and clone credit cards. The industry has set a deadline of Oct. 1, 2015, for retailers and card issuers to adopt this new system, called the “liability shift.” Under this new arrangement, the party that fails to deploy the technology, such as a retailer or card issuer, will bear the cost of resolving fraudulent transactions.

Everything in the secure production area must comply with standards set forth by an international organization called the PCI Security Council, founded by American Express, Discover Financial Services, JCB International, MasterCard and Visa to protect credit card account data. According to these tight security protocols, rooms shouldn’t have a door, and if it has to have one, employees are not allowed to enter alone, they must always work in pairs.

Before entering the production floor, I am asked to surrender my cell phone and wear a special lab coat with no pockets. Some workers are allowed to wear hospital scrubs, but with the pockets sewn shut. I then use my badge to proceed through a pair of secure doors called a man-trap, that only allows one person to enter at a time.

According to Sappenfield, there has never been a security breach in their manufacturing process.

Getting Cards Chipped & Out Into the World

During my visit to their other facility in the Denver area earlier this year (when I covered How a Credit Card Is Made), they had two machines dedicated to embedding EMV smart chips into credit cards at a rate of 3,800 per hour. Now they have six of those machines cranking out new cards, room for seven more, and three more at another facility in a different state. In fact, they are now scrambling to produce EMV chip cards at a rate of over 400 million cards per year, to begin replacing the more than 1.2 billion cards in circulation that only use magnetic stripes.

In this facility, there is a vault containing a stockpile of new EMV chips. These new chips arrive glued to paper strips, and are wound around a spool much like the old filmstrips once shown in schools. Each reel of new chips is then stored in a box on a shelf, kind of like a book in a library.

An armored truck arrives with credit cards from CPI’s other Denver-area facility where they are produced. At this facility, they get outfitted with the smart chips. The cards are moved from the truck and then placed in the shipping version of the man-trap, so that delivery personnel never have access to the production facility. Machines cut out a hole in the surface of the finished cards and embed the smart chips, then encode them with the cardholders’ data. Finally, the cards are imprinted with account numbers and cardholders’ names before being inserted into envelopes for mailing.

Exiting the facility, I go back through the man-traps, hand back my badge and lab coat, and my mobile phone is returned to me. Sappenfield informs me that the credit cards in a typical wallet are more likely to have been produced there than anywhere else. We take a moment to go through the cards in my wallet, and he is able to point out several that were produced by CPI.

What This Means for Consumers

In an interview with Credit.com earlier this year, Visa’s Chief Risk Officer Ellen Richey talked about the new card technology and what consumers could expect. At the time of the interview in March, she estimated that there were already 7 million chip cards in the U.S. market, “mostly sent to consumers who travel overseas a lot.” As for the rest of consumers, she said it would be more likely that many will get their smart chip cards when their cards get renewed.