extends zero-liability policy to ATM transactions
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[May 29, 2014]
By Tanya Agrawal
(Reuters) - MasterCard Inc,
the world's second-largest debit and credit card
company, said it was extending its zero-liability policy
for cardholders in the United States to include all
PIN-based and ATM transactions.
The move follows several data breaches at U.S. companies including
one at Target Corp late last year involving the theft of about 40
million credit and debit card records.
"The move by MasterCard just enhances the sense of security for
people at a time when it has been shaken up significantly in recent
times", said Gil Luria, an analyst with Wedbush Securities Inc.
Zero-liability protection currently covers card transactions that
require a customer's signature but does not apply if an account
holder's personal identification number (PIN) was used for
unauthorized transactions. The new policy will take effect in
Zero-liability protection means the account holder will not be held
responsible for unauthorized transactions.
Larger rival Visa Inc's zero-liability policy does not apply to
PIN-based and ATM transactions, according to information available
on the company's website.
"The changes that we're making in cardholder protection combined
with our efforts to move the U.S. payments industry to EMV chip
technology will help deliver safer shopping experiences to
consumers," said Chris McWilton, president, North American Markets
The two companies have urged banks and retailers to meet an October
2015 deadline for the adoption of "EMV" chip technology that would
make it safer to pay with plastic.
"This all comes back to the adoption of EMV. Of all the cards that
are breached at ATMs, a majority of them are non-EMV cards. This is
just another way for the company to impress upon the importance of
quickly adopting EMV cards," said Philip Philliou, managing partner
of Philliou Partners LLC, a firm that helps banks and retailers
select payment processors.
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U.S. cards issued by MasterCard will also carry identity theft
resolution assistance, which helps cancel missing cards, alert
credit reporting agencies and conduct searches to detect if stolen
confidential data appears online, MasterCard said on Wednesday.
The financial impact from the extension of the coverage is expected
to be minimal for MasterCard, according to Luria.
MasterCard shares were little changed at $77.17 in late-morning
trading on the New York Stock Exchange on Wednesday.
(Editing by Kirti Pandey and Sriraj Kalluvila)
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