Bank of America is the first major U.S. bank to issue EMVchips on all new and reissued retail and small business debit cards startingthis week – to help reduce counterfeit fraud. The U.S. is behind many countries outside of the U.S. that haveimplemented EMV technology already. MasterCard and Visa have decided that as of October 2015, all U.S.issued credit and debit cards should include EMV technology or issuers withoutthe technology would assume fraudulent charges on those cards without EMV. The payments industry has seen card presentfraud falling in countries with EMV implemented, and card present fraudincreasing in the U.S.
Bank of America is implementing the EMV chips on all newsignature and PIN debit cards as well as on existing debit cards when theircards are replaced upon expiration or for any other reason. Bank of America has added EMV to its U.S.consumer, commercial and corporate credit cards since 2012.
“Chip technology is animportant tool in increasing card security, and we want our customers to havethe best possible experience when using their payment cards,” said Titi Cole,retail products and underwriting executive for Bank of America. “The newchip-enabled debit cards will improve security of customers’ transactions whentraveling abroad and at home as more U.S. merchants adopt chip technology.”
Bank of America making the big push into implementing EMV ondebit cards is news in the debit card business. Most processors are still indevelopment or testing of their EMV implementations – although a few havestarted down the path of issuing cards. Given the size of their debit portfolio, however, the beginning of EMVissuance on debit cards is significant. The expectation is that only 2-3% of debit cards will be issued with EMVin 2014, and the ramp up in 2015 will be slow compared with credit cards. Much of the delay had to do with theuncertainty of the Durbin Amendment appeals outcome. Once the U.S. Circuit Court of Appeals rulingcame out in the spring of 2014 favoring the Federal Reserve interpretation ofthe Durbin Amendment, and two un-aligned EFT routing networks was confirmed,the plans began to take shape. It stilltook several months of planning to determine how to technically enable merchantrouting. The next barrier to implementation will be capacity constraints onchips, production facilities and processor resources.
Overview by Ron Mazursky, Director of the Debit Advisory Service
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