The Green Sheet Online Edition
May 13, 2013 • Issue 13:05:01
Accord reached on EMV liability shift
In advance of a contactless payment-related deadline imposed by MasterCard Worldwide on the U.S. ATM industry, the National ATM Council Inc. and the card brand reported they had reached agreement on ways to support the transition of U.S. ATMs to the Europay/MasterCard/Visa (EMV) chip and PIN standard, which is considered more secure than the security afforded mag stripe-enabled cards.
By April 19, 2013, MasterCard expects the U.S. ATM industry to have its ATMs configured to accept non-U.S.-issued and EMV-enabled MasterCard Worldwide branded Maestro cards. For ATM operators that do not have their ATMs properly configured to accept the cards by the deadline, a liability shift will occur where those ATM operators will be responsible for any fraud that occurs on those cards when non-EMV-compliant machines are involved. It is one early deadline for the entire payments industry's road map to full compliance with the EMV standard by Oct. 1, 2016, as imposed by MasterCard. (Visa Inc. has a slightly different timeline.)
Fraud solution deployed for free
NAC, which represents independent U.S. ATM providers, has been working with MasterCard to facilitate the transition to EMV. The companies said in a joint statement that they had reached "a balanced and workable arrangement that should support the U.S. ATM industry in managing the liability shift program." Specifically, the dialogue resulted in MasterCard taking the following steps:
- Deploy Fraud Rule Manager to help block fraud on cross-border card transactions conducted at U.S. ATMs
- Require no additional fees from ATM acquirers and operators to deploy Fraud Rule Manager, making it easier to implement the service
- Continue to cooperate with NAC on the ongoing deployment of EMV at ATMs in the United States, as well as consider incentives for ATM operators to encourage migration to EMV in a timely fashion.
Accord and discord
In February 2013, ATM operators represented by NAC requested MasterCard give them more time to reach EMV compliance before imposition of the liability shift. The operators pointed out that technical issues pertaining to EMV deployment in the United States are still unresolved. They also said they need more time to transition the more than 425,000 ATMs in the United States to the EMV standard.
NAC and MasterCard said the point of the liability shift program is to prevent fraud by implementing EMV at all POS devices, including ATMs. At the same time, payment businesses are given the choice about "whether, when and how to implement EMV technology," the organizations noted.
The program has been undertaken for the apparent good of the entire payments industry. "All of this is being done with an eye toward a broader migration - and to more effectively and comprehensively prevent fraud - over the next few years," the organizations said. "Together, we will continue to deliver consumers the reliable and secure access to their money they have come to expect over the past 45-plus years, in this instance through ATMs."
But doubts persist. In a Feb. 11, 2013, Federal Reserve Bank of Atlanta blog post, Douglas King, a Payments Risk Expert in the Atlanta Fed's Retail Payments Risk Forum, expressed reservations about the U.S. push to EMV largely because it does not address card-not-present (CNP) fraud. "Until a cost-effective and consumer-friendly CNP fraud reduction solution gains traction, I believe a business case for EMV built around fraud losses will remain difficult to build," he said.
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