Relates to requiring credit cards to contain smart chip technology; states that a lending institution shall not issue credit or debit cards without smart chip technology; provides definitions for the terms "smart chip", "chip and pin", and "chip and signature."
TITLE OF BILL: An act to amend the banking law, in relation to requiring credit cards to contain smart chip technology
PURPOSE: To require credit cards issued to New York State residents be equipped with smart chip technology.
SUMMARY OF PROVISIONS:
Section one adds a new subdivision 30 to section 2 of the banking law to define the terms "smart chip," "chip and PIN," and "chip and signature."
Section two adds a new section 9-v to the banking law to require that lending institutions must issue credit cards containing smart chip technology.
Section three provides the effective date.
JUSTIFICATION: Today, most credit cards issued to New Yorkers still rely on the magnetic stripe - a technology which was developed in the 1960s. However, more than 80 countries have adopted smart chip technology for the issuance of credit cards.
The technology enables a credit card user's information to be stored on a microprocessor chip, instead of the magnetic stripe which is much easier to hack. The information contained on the chip is encrypted, and the user's address and PIN are not stored.
Millions of people each year are affected by credit card fraud. In a recent case, a retailer had 40 million debit and credit accounts hacked. In Canada, debit card fraud has dropped 45% since the initial implementation of chip and pin in 2009. This legislation is necessary to protect consumers from hackers and credit and debit card fraud.
LEGISLATIVE HISTORY: New.
FISCAL IMPLICATIONS:. None to the state.
EFFECTIVE DATE: Immediate and shall apply to all credit cards issued or reissued on and after January 1, 2015.
STATE OF NEW YORK ________________________________________________________________________ 6551--A IN SENATE February 4, 2014 ___________Introduced by Sen. GRIFFO -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- recommitted to the Committee on Consumer Protection in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the banking law, in relation to requiring credit cards to contain smart chip technology THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 2 of the banking law is amended by adding a new subdivision 30 to read as follows: 30. SMART CHIP. THE TERM, "SMART CHIP" MEANS A CREDIT CARD TECHNOLOGY WHERE CARDS ARE EMBEDDED WITH CHIPS AND A CARDHOLDER MUST PUT IN THEIR PIN OR SIGN FOR EACH TRANSACTION TO BE APPROVED. THIS INCLUDES "CHIP AND PIN" AND "CHIP AND SIGNATURE" AS SECURE METHODS TO PROTECT AGAINST CARD HACKERS AND FRAUD. (A) "CHIP AND PIN" REQUIRES A CONSUMER TO ENTER A PIN NUMBER AFTER EACH TRANSACTION FOR APPROVAL. (B) "CHIP AND SIGNATURE" REQUIRES A CONSUMER TO INSERT THE CARD INTO A PORTABLE ELECTRONIC READER AND THEN SUBSEQUENTLY SIGN FOR APPROVAL OF THE TRANSACTION. S 2. The banking law is amended by adding a new section 9-v to read as follows: S 9-V. SMART CHIP TECHNOLOGY. A LENDING INSTITUTION, AS DEFINED IN PARAGRAPH (A) OF SUBDIVISION ONE OF SECTION NINE-T OF THIS ARTICLE, SHALL NOT ISSUE CREDIT CARDS OR DEBIT CARDS WITHOUT SMART CHIP TECHNOLO- GY AS DEFINED IN SUBDIVISION THIRTY OF SECTION TWO OF THIS ARTICLE. S 3. This act shall take effect immediately and shall apply to all credit cards issued or reissued on and after January 1, 2015.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13699-02-4