MasterCard Worlwide is urging ATM owners to add hardware for accepting chip card payments. Those that do not may be faced with a higher level of liability.
MasterCard’s plan affects interregional transactions on its Maestro network. The card brand sent a bulletin to banks and ATM makers last week detailing the new requirements, which would take effect April 19, 2013.
The liability shift have already been in effect overseas. The new deadline covers the U.S. and Asia-Pacific regions. Australia and New Zealand also are affected but with a Dec. 31, 2015, deadline.
The liability shift will "align technology efforts to prevent and manage fraud," a MasterCard spokesperson said in a Sept. 7 email. He would not provide a copy of the bulletin.
MasterCard's focus on the ATM should reduce fraud in a channel that is not directly addressed by Visa Inc.’s plan, which focuses on the point of sale. Visa says its merchants must accept chip cards that adhere to the EMV standard by October 2015 to avoid a shift of liability for fraud to the merchant's acquirer.
At MasterCard, the liability would shift to the ATM acquirer under similar circumstances. Currently, the card's issuer bears the liability for ATM and point-of-sale transactions.
Payment cards that use the EMV standard commonly are called chip-and-PIN cards for their most prominent security feature. In addition to a PIN, EMV cards can use encrypted and dynamic data to improve security for card-present transactions.
By focusing on the ATM, "MasterCard is going after a big point of pain for domestic and overseas banks," says Julie Conroy McNelley, a senior analyst for Aite Group.
However, MasterCard's move is not as far-reaching as it could be. "If it’s just Maestro, it will have a less widespread impact in the U.S., as that is their tertiary brand here," she says.
Many other countries already require credit and debit cards to use EMV chips. Fraudsters deterred by EMV often shift their focus to the U.S. to exploit the more easily compromised magnetic stripe cards, McNelley says.
Skimming causes average losses of $50,000 per affected ATM, and there is three times as much crime on debit cards as on credit cards, McNelley says.
MasterCard's program "needs to get done for EMV to be meaningful; it is a good thing they are requiring it. Visa should have, too," says Gartner Inc.'s Avivah Litan.
MasterCard set an aggressive deadline for making the upgrade to EMV, experts say.
However, ATM makers Diebold Inc. and NCR Corp. say they support MasterCard's move and are ready to make the changes immediately. Both say they received MasterCard's bulletin, and they already build EMV-accepting machines for international clients.
MasterCard "seems to be attacking the criminals' redemption [of cash] squarely where it belongs," says Chuck Somers, Diebold vice president of ATM security and systems.
