MasterCard Brings EMV Chip-Card Liability Policy to U.S. ATMs

ATM operators have long expressed confusion about the migration to EMV chip-card technology in the U.S., since the card brands were focused mainly on point of sale terminals.  MasterCard made things far clearer today with its announcement of an October 2016 deadline for a liability shift for ATM operators.

With no clear direction from Visa Inc. as of yet regarding ATM adoption of the EMV standard, some operators admitted not being completely aware of MasterCard's initial extension of its existing EMV liability shift program for inter-regional Maestro card ATM transactions with an April 19, 2013 deadline in the U.S. 

MasterCard's new policy states that if fraud occurs on a transaction initiated through any EMV card after the deadline date on any MasterCard networks (MasterCard, Cirrus and Maestro), the ATM owner bears the liability for that fraud if the ATM was not properly equipped to support EMV technology.

The announcement shows MasterCard's commitment to the U.S. migration to EMV cards, which provide more security than magnetic-stripe cards, Mike Weitzman, group executive for MasterCard U.S. markets, stated in a press release.

"As other markets have migrated to EMV, we have seen fraud shift to the least secure channel," Weitzman said. "By establishing this liability shift, we're advancing efforts to prevent and reduce fraud."

The announcement's timing also allows MasterCard issuers, acquirers and ISOs the "flexibility and sufficient time to manage their ATM technology decisions," Weitzman said.

While widespread adoption of EMV at the ATM will help curtail fraudulent skimming at those machines, not everyone will be jumping for joy about the establishment of a liability deadline for ATM acceptance of EMV cards, says Julie Conroy McNelley, senior analyst and fraud expert with Boston-based Aite Group.

"Third-party ATM owners in particular will be dismayed," McNelley says in her Aite blog post on the topic. "It costs approximately $2,000 to upgrade an ATM to be EMV-capable, which is a huge expense for a large ATM operator with a fleet of thousands of ATMs."

The alternative — accepting the fraud liability — is not particularly appealing either, since there is little the ATM owner can do to mitigate this type of fraud, she adds.

Card fraud doesn't disappear when EMV is introduced to a new country, she says. It merely migrates to the path of least resistance.

"This announcement provides a path toward protecting a channel that banks and consumers alike depend on heavily, and on balance, it's a step in the right direction for the industry," she says.