Card security and technology will reach a new level for some Bank of America cardholders.
One of the concerns of a frequent international traveler is card usability when standards differ from the United States and foreign countries.
Bank of America (NYSE: BAC) mitigates that concern for commercial cardholders with a new chip-and-PIN card due to hit wallets in the first quarter of 2012.
The chip-and-PIN card from Bank of America is compliant with EMV (EuroPay Mastercard Visa) standards that have been widely adopted internationally due to rising card fraud and criminal activity. Crooks gathered card data by mounting card skimming devices then used the stolen data to replicate cards for fraudulent purchases.
International merchants have now incorporated new card terminals that only accept cards that abide by EMV standards. The U.S. has yet to do the same so most Americans are holding plastic with traditional magnetic stripes. When they visit countries abroad, their cards are rendered useless because merchants can no longer process transactions with cards carrying the magnetic strip.
Bank of America’s chip-and-PIN card carries an embedded chip that is read by a merchant terminal and it requires PIN entry – not just signature that can be forged. During each unique transaction, the chip encrypts data in a new way. The additional layers of authentication means that the card user has to physically possess the card and know the PIN to make a purchase.
However, the new card will continue to sport the magnetic stripe for use in the U.S.
EMV Makes Progress
The U.S. financial industry has long been criticized for lacking the momentum to push for EMV standards. The magnetic stripe was introduced by IBM in 1960 and there has been little innovation since.
With Bank of America, Chase, Wells Fargo, and Citibank now offering EMV cards to select customers, there are signs of progress.
Currently, chip-and-PIN cards are out of reach for regular American consumers. For issuers that offer EMV cards, they’re typically available to commercial or high-value clients.
In August, Visa – the world’s largest card payments processor – set plans to incentivize merchants to adopt EMV by October 2015. In a few more years, Americans make have a totally new way of “swiping”.