Consumer Payment Card News

MasterMoney Liability Reduced

MasterCard announced it will cap liability for unauthorized use of all U.S.-issued MasterCard-branded debit cards at $50. The move reflects the existing practice of many MasterMoney debit card issuers. At year-end 1996, the number of MasterMoney cards had grown from the previous year by 106 percent to 15.6 million cards and $8.7 billion in transactions volume.. This growth is continuing into 1997 as first quarter cards totaled 16.5 million, a 79 percent increase over first quarter 1996. MasterCard says, one-hundredths of one percent (.02%) of MasterCard-branded debit card transactions are fraudulent.

FULL STORY:

As debit cards continue to grow in popularity as a preferred payment method among U.S. consumers, MasterCard International and its U.S. member banks voted in June to cap liability for unauthorized use of all U.S.-issued MasterCard(R)-branded debit cards at $50. Prior to this move, liability limitations for debit cards were set by federal regulations and ranged from $50 to an unlimited amount.

This change only protects debit cardholders whose cards bear the MasterCard logo. Many financial institutions issue these cards under the program name MasterMoney(TM). Adding the MasterCard logo on the front of an ATM card gives consumers the power to make purchases around the world anywhere the MasterCard logo is displayed, with funds being deducted directly from the cardholder’s deposit account.

This move is occurring at the direction of MasterCard member banks, and reflects the existing practice of many MasterCard-branded debit card issuers. MasterCard is the only payments company to have adopted this higher level of protection on its U.S.-issued debit cards.

“The Board realized that consumers had come to expect a certain level of protection from the MasterCard brand. We are confident that with these new protections in place, member financial institutions will continue to provide the best debit card program of its kind in the U.S.,” said Alan J. Heuer, president, U.S. Region, MasterCard International. “We congratulate MasterCard banks on being forward thinking in making this change on behalf of their customers.”

“We applaud this move by MasterCard to insure consumer confidence in the debit card,” said Robert Hedges, senior vice president, Fleet Financial Group. “Given the critical role of credit and debit cards in the payment system, the pro-active adoption of policies that ensure the programs’ future success — by protecting the consumers’ interest — is an important move.”

“This move formalizes the current practices of many MasterCard debit issuers, including Chase, and gives consumers further reassurances that their accounts are protected when using any MasterCard-branded debit card,” said Ronald Braco, senior vice president, the Chase Manhattan Bank. Chase Manhattan Bank is a major issuer of MasterCard branded debit cards and markets its program under the name Chase Banking Card. “Protecting customer’s funds has always been a key objective of Chase with this product. All of the security and fraud control features utilized to protect a customer’s credit card have been deployed for the Chase Banking Card,” he added.

Consumer use of MasterCard MasterMoney debit cards has increased dramatically in the past few years. At year-end 1996, the number of MasterMoney cards had grown from the previous year by 106 percent to 15.6 million cards and $8.7 billion in transaction volume. This growth is continuing into 1997 as first quarter cards totaled 16.5 million, a 79 percent increase over first quarter 1996.

“With this new level of consumer protection, we believe that overall MasterMoney usage will further increase as consumers continue to embrace debit cards as a more convenient and time-saving alternative to cash and checks,” said Heuer. “This industry-first action helps underscore the point that MasterCard MasterMoney cards offer unsurpassed consumer protection, acceptance and convenience.”

Anti-Fraud Measures Shown Successful

“Reflecting general trends for all MasterCard-branded cards, fraud losses on MasterMoney cards have remained extremely low,” said Irene Katen, vice president of business management, U.S. Deposit Access, MasterCard International. Of the hundreds of millions of MasterMoney transactions that took place in 1996, only two one-hundredths of one percent (.02%) were fraudulent.

“A key reason that MasterMoney fraud numbers are so low is that our member financial institutions do a tremendous job of protecting themselves and their cardholders. Many MasterMoney issuers use anti-fraud tools like velocity monitoring, neural network technology and daily spending limits to thwart fraud thereby protecting their customers and themselves from loss. In addition, financial institutions have emphasized consumer education in order to teach cardholders the importance of immediately reporting the loss, theft or unauthorized use of their debit cards,” continued Katen. MasterCard continues to conduct consumer education campaigns informing debit cardholders of the need to safeguard their cards.

MasterCard International, a payments company with one of the world’s most recognized brands, is dedicated to helping more than 23,000 financial institutions around the world offer consumers a variety of payment options. MasterCard remains focused on helping shape the future of money by expanding acceptance of its global brands (MasterCard(R), Maestro(R), Mondex(TM) and Cirrus(R), the world’s largest ATM network) and maintaining reliable, secure networks facilitating global value exchange. MasterCard has 400 million credit and debit cards that are accepted at more than 14 million merchant, cash and ATM locations worldwide. In 1996, gross dollar volume generated exceeded $550 billion. MasterCard can be reached through its World Wide Web site at http://www.mastercard.com .

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