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MasterCard Extends Zero-liability Policy to High Risk ATM Transactions

MasterCard Inc just announced an extension of zero-liability coverage to their North American customers. Under this policy, there will be no penalty if a customer’s debit or credit card commits unauthorized transactions; this includes PIN based and high risk ATM transactions. The move is a welcomed relief to MasterCard cardholders. In the midst of a tidal wave of security breaches, consumer confidence in the security of their private credit information has plummeted.

Gil Luria, an analyst for Wedbush Securities Inc. states, “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.”

The announcement could also mean an influx of new customers for MasterCard. Since the highly publicized security breaches of retailers like Target, which resulted in over 40 million debit and credit card information stolen, more and more consumers are searching for companies that emphasize security and offer zero liability options.

Currently, zero liability protects consumers against fraudulent transactions that require a signature. Visa Inc. offers zero liability but the plan does not cover PIN-based or ATM transactions. MasterCard’s new policy which includes PIN transactions and high risk ATM transactions will begin in October.

The new policy makes MasterCard the only major card issuer to offer full zero liability, and is designed to motivate consumers to continue to trust and use their credit cards. “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, the president of MasterCard’s North American Markets.

Visa and MasterCard Inc. have both urged banks and retailers to adopt the “EMV chip” by the October 2015 deadline. The technology is designed to make credit card transactions safer and has been used in countries around the world for many years.

Phillip Philliou, the manager of a firm that helps banks and retailers select payment processors adds, “This all comes back to the adoption of EMV,” Philliou says, “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.”

MasterCard will also offer cardholders identity theft resolution assistance that closes down missing card accounts, alerts credit report agencies, and conduct searches for stolen data online.