ATM Operators and Internaonal Transacons A Path To A Beer Internaonal Cardholder Experience

Ron Schniman, Senior Vice President, ATM Channel & Retail Distribuon

Smart Card Alliance – 2104 Payment Summit, Salt Lake City February 5 - 7

The opinions expressed by Mr. Schniman are his own and do not necessarily represent the views of EMV – A Path To A Beer Internaonal Cardholder Experience

Why are internaonal transacons important to Bank of America? • Bank of America ATMs process a material number of internaonal transacons relave to the total number of non-Bank of America cardholders that use Bank of America ATMs. • Bank of America is a member of the Global ATM Alliance. The Global ATM Alliance members include Bank, BNP Paribas Bank, , Scoa Bank, and Bank. Each member provides surcharge free access to each others ATMs. Members cardholders seek out the approximately 50,000 Global ATM Alliance ATMs. • Bank of America ATMs can be found in many of the highest US desnaon cies for internaonal travelers . • Internaonal authorizaon rates average between 60% to 70% well under the domesc rate of nearly 90%. This is due to many internaonal issues causing the blocking of transacons in regions with lile or no EMV authencaon. EMV – A Path To A Beer Internaonal Cardholder Experience

EMV at the ATM in the U.S., where are we? • In September 2011, MasterCard announced a shi in liability for cross boarder Maestro transacons effecve April 19th 2013. • Domesc shi in liability is in 2016 for MasterCard and 2017 for VISA • A majority of ATMs see lile to no Interregional Maestro acvity and would probably not see a major impact to their business. • The remaining ATMs could see material shis in liabilies without migaon. • MasterCard rolled out Fraud Rule Manager to assist ATM owners in migang the shi in liability losses. EMV – A Path To A Beer Internaonal Cardholder Experience

EMV at the ATM in the U.S., where are we connued? • Most major ATM deployers have developed plans to implement authencaon of EMV transacons which include upgrades to hardware and soware. • A small percentage of ATMs have begun to authencate EMV. • A material number of ATMs are expected to authencate with EMV in 2014. • ATM industry is collaborang via the EMV Migraon Forum’s ATM Working Commiee to develop a white paper to assist ATM owners in understanding what it takes to implement EMV at the ATM. • White paper is expected to be published by the end of April,2014. The working commiee consists of ATM owners, manufacturers of ATMs and encrypon hardware, front end and tesng soware providers, payment networks, processors, and industry associaons.

EMV – A Path To A Beer Internaonal Cardholder Experience

Why implement EMV now? • Improve the internaonal cardholder experience • Drive the internaonal card authorizaon rate from the 60%-70% towards the nearly 90% domesc rate • Early adopters will benefit from issuers driving cardholders to EMV capable devices. • Migate the shi in liability losses • Best way to migate is to implement EMV • Other opons require blocking potenally good transacons, which can cause customer confusion • Fraud Rule Manager is a tool to migate as migraon to EMV is developed EMV – A Path To A Beer Internaonal Cardholder Experience

Why implement EMV now connued? • Mulgeneraonal planning • Most ATM owners take a mulgeneraonal planning approach to implemenng new hardware and soware at the ATM. It takes years to plan, code, and rollout soluons. • Hardware upgrades are parcularly challenging. The sooner you start to get the hardware out the beer off you are. You can roll hardware out ahead of soware. • Refresh cycles for an ATM are typically 6-10 years. If you didn’t begin installing EMV card readers to your ATMs 6 years ago, you will likely need to update your card readers ahead of your normal schedule of replacement. • Begin the process of understanding the customer experience challenges • It can take years to develop screen flows that avoid card capture and customer confusion EMV – A Path To A Beer Internaonal Cardholder Experience

Why does EMV present customer experience challenges? • Today’s magstripe cardholder experience at an ATM in the U.S. is designed to give the card back immediately to avoid card capture • Motorized Card Reader • Cardholder inserts card , magstripe is read and card is returned immediately • Dip card reader • Card holder inserts and immediately removes, magstripe is read on way out EMV – A Path To A Beer Internaonal Cardholder Experience

Why does EMV present customer experience challenges? • Once EMV is implemented, card can not be returned immediately, card must be held unl the chip is read and auth is completed. • Motorized Card Reader • Must find an opportunity within the screen flow to return the card before the customer walks away • Dip card Reader. • As many as half the ATMs in U.S. are dip card readers. • Dip card reader implementaons require the card to be clamped down and released when appropriate. • During migraon, ATM Owners implement “double dip” soluon • EMV card is inserted and removed from Dip Card reader • Magstripe is read to determine if the card has EMV capability • EMV card holders are then asked to reinsert their card EMV – A Path To A Beer Internaonal Cardholder Experience

Other consideraons • Contactless • ATM owners all need to consider contactless as they look to upgrade or replace their hardware. • No clear direcon as to what the standard will be. NFC, contactless EMV… As the card strategy goes, so goes the ATM • EMV Migraon Forum ATM Working Commiee is not in a posion to drive this decision. It is focused on collaborang to make EMV migraon as smooth as possible for the consumer and for ATM owners. EMV – A Path To A Beer Internaonal Cardholder Experience

Other consideraons connued • Change PIN at ATM • ATM would be a good channel to consider implemenng changing off line PIN. • U.K. and other countries implemented change PIN across all ATMs at the me of migraon. • Today, many FIs provide cardholders online Change PIN funconality at the ATM. Ulizing ATM to update offline PIN and synching it with on-line at the ATM would be an opportunity to move the service from banking centers to ATM. • Further expanding Change PIN to allow cross payment network ability would also benefit issuers that implement EMV cards with offline PIN capabilies. • EMV Migraon Forum ATM Working commiee has been working to educate ATM owners and issuers on what it would take to implement change PIN.