Bank of America plans to issue chip-based debit cards to customers next month, signaling a resolution of the long-standing issues plaguing EMV debit card issuance in the U.S.
The payments industry spent years debating how to properly bring EMV-chip cards in compliance with the Durbin amendment, which mandates that debit cards have multiple routing options. Bank of America says it's the first U.S. issuer to convert its debit cards to EMV. It has been adding chips to its consumer, commercial and corporate credit cards in the U.S. since 2012.
"Chip technology is an important tool in increasing card security, and we want our customers to have the best possible experience when using their payment cards," said Titi Cole, retail products and underwriting executive for Bank of America, in a Sept. 30 press release.
The bank is "on track" to convert the majority of its card portfolio to EMV by late next year, Cole said.
The card networks set an October 2015 deadline for most U.S. companies to be able to handle EMV-chip cards (fuel merchants have an extra two years). After the deadline passes, companies that don't use EMV will see a shift in fraud liability.
To enable EMV acceptance in the U.S., the independent debit networks are working with Visa and MasterCard to share an application identifier, or AID, on EMV debit cards. Cards will use a major brand's application as well as a common AID for other networks.
First Data and Visa broke the ice in late February, penning an agreement to share Visa's technology, and setting off a string of similar agreements between various networks and the major brands.
Such agreements were considered a long shot just a year earlier, when the independent networks and the card brands tussled over coding rules and governance of the technology.
The federal routing mandate was problematic for the U.S. in its conversion to EMV technology because of the numerous debit routing options available in the country.
Prior to the Bank of America announcement, terminal manufacturers were already testing the common AID on chip-based debit cards, said Thierry Denis, president of Ingenico North America.
"The last hurdle was the Durbin amendment and its effect on EMV debit transactions," Denis said. "We have been in a lot of discussions with issuers and processors as we are also working with them to assure EMV debit will work with Near Field Communication as well."