By Kery Murakami
Oct. 2 — Banks prioritized customers with the most heavily-used payment cards as they rolled out fraud-preventing EMV chips, a Visa executive and an industry analyst said, prompting questions about whether higher-income people are receiving greater privacy protections.
Speaking at a forum Oct. 1 on the Europay, MasterCard and Visa chips, Kimberly Lawrence, Visa's head of North American operations, said issuers offering EMV cards “have prioritized their portfolios based on who's spending the most. They're kind of optimizing their investments.”
A Citi spokeswoman denied a link between spending and how the bank has distributed the EMV card, while other banks declined to detail how they've prioritized distribution of the technology.
Aite Group Research Director Julie Conroy, though, said bank officials have told her they have distributed EMV-protected cards based on spending. Banks initially prioritized their international travelers for their first rounds of EMV issuance because of the difficulty in using old magnetic-stripe cards abroad, she said in an Oct. 2 e-mail to Bloomberg BNA.
“As banks began mass issuance of EMV, many of the banks I've spoken with prioritized their most active users of cards for reissuance, since these cardholders naturally represent the most exposure,” she said. “This roughly translates to consumers with higher net worth, since they'll be spending more on an aggregate basis.”
Consumer groups were split on the impact. “All card-using consumers should have the benefit of more secure chip-enabled cards. Lower-income consumers should not be treated as second-tier customers,” Christina Tetreault, a staff attorney with Consumers Union's financial services program, told Bloomberg BNA in an Oct. 2 e-mail.
Other consumer advocates, though, were less concerned, saying victims of fraud involving counterfeited cards are reimbursed by either their bank or the merchant. Linda Sherry, Consumer Action's director of national priorities, said the EMV distribution approach appeared “reasonable” because “high spenders tend to have high credit limits. So if someone clones (counterfeits) their cards, the damage will be very high, as opposed to those with smaller credit limits.”
Still, she said having to get a replacement if a card is counterfeited could be more of a hassle for low-income people, who are more likely to only have one credit card.
A change in the policies of card providers Oct. 1 shifted the liability for fraud involving counterfeit EMV cards from banks to retailers, if those merchants do not have chip readers(191 BBD, 10/2/15).
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