ATM Operators and Internaonal Transac0ons A Path To A Be+er Internaonal Cardholder Experience Ron Schni+man, Senior Vice President, ATM Channel & Retail Distribu/on Smart Card Alliance – 2104 Payment Summit, Salt Lake City February 5 - 7 The opinions expressed by Mr. Schni+man are his own and do not necessarily represent the views of Bank of America EMV – A Path To A Be9er Interna0onal Cardholder Experience Why are internaonal transac/ons important to Bank of America? • Bank of America ATMs process a material number of internaonal transac/ons 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 Barclays Bank, BNP Paribas Bank, Deutsche Bank, Sco/a Bank, and WestPac 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 des/naon ci/es for internaonal travelers . • Internaonal authorizaon rates average between 60% to 70% well under the domes/c rate of nearly 90%. This is due to many internaonal issues causing the blocking of transac/ons in regions with li+le or no EMV authen/caon. EMV – A Path To A Be9er Interna0onal 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 transac/ons effec/ve April 19th 2013. • Domes/c shi] in liability is in 2016 for MasterCard and 2017 for VISA • A majority of ATMs see li+le to no Interregional Maestro ac/vity and would probably not see a major impact to their business. • The remaining ATMs could see material shi]s in liabili/es without mi/gaon. • MasterCard rolled out Fraud Rule Manager to assist ATM owners in mi/gang the shi] in liability losses. EMV – A Path To A Be9er Interna0onal Cardholder Experience EMV at the ATM in the U.S., where are we con/nued? • Most major ATM deployers have developed plans to implement authen/caon of EMV transac/ons which include upgrades to hardware and so]ware. • A small percentage of ATMs have begun to authen/cate EMV. • A material number of ATMs are expected to authen/cate with EMV in 2014. • ATM industry is collaborang via the EMV Migraon Forum’s ATM Working Commi+ee 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 commi+ee consists of ATM owners, manufacturers of ATMs and encryp/on hardware, front end and tes/ng so]ware providers, payment networks, processors, and industry associaons. EMV – A Path To A Be9er Interna0onal 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% domes/c rate • Early adopters will benefit from issuers driving cardholders to EMV capable devices. • Mi/gate the shi] in liability losses • Best way to mi/gate is to implement EMV • Other op/ons require blocking poten/ally good transac/ons, which can cause customer confusion • Fraud Rule Manager is a tool to mi/gate as migraon to EMV is developed EMV – A Path To A Be9er Interna0onal Cardholder Experience Why implement EMV now con/nued? • Mul/generaonal planning • Most ATM owners take a mul/generaonal planning approach to implemen/ng new hardware and so]ware at the ATM. It takes years to plan, code, and rollout solu/ons. • Hardware upgrades are par/cularly challenging. The sooner you start to get the hardware out the be+er off you are. You can roll hardware out ahead of so]ware. • 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 Be9er Interna0onal 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 Be9er Interna0onal Cardholder Experience Why does EMV present customer experience challenges? • Once EMV is implemented, card can not be returned immediately, card must be held un/l 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” solu/on • 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 Be9er Interna0onal Cardholder Experience Other consideraons • Contactless • ATM owners all need to consider contactless as they look to upgrade or replace their hardware. • No clear direc/on as to what the standard will be. NFC, contactless EMV… As the card strategy goes, so goes the ATM • EMV Migraon Forum ATM Working Commi+ee is not in a posi/on 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 Be9er Interna0onal Cardholder Experience Other consideraons con/nued • Change PIN at ATM • ATM would be a good channel to consider implemen/ng 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 func/onality at the ATM. U/lizing 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 capabili/es. • EMV Migraon Forum ATM Working commi+ee has been working to educate ATM owners and issuers on what it would take to implement change PIN. .