* Cards issued in U.S. to have identity theft resolution
* Zero-liability coverage extension to take effect in Oct
(Adds analysts' comments, background, share movement)
By Tanya Agrawal
May 28 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
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
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 for MasterCard.
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.
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
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
(Editing by Kirti Pandey and Sriraj Kalluvila)