SB 1351, as introduced, Hill. Credit and debit cards.
Existing law generally provides for the regulation of credit and debit cards, including, but not limited to, limitations on the methods for offering and denying a credit card, requirements for listing the name appearing on a credit card, and restrictions on a person’s liability for an unauthorized used of his or her credit or debit card.
This bill would require, starting October 1, 2015, a bank, credit union, or financial institution to issue a credit or debit card with microchip technology, as specified. The bill would also require, starting on the same date, a retailer to utilize a credit or debit card scanner that accepts a credit or debit card with either a magnetic stripe or microchip technology or any other similar technology, as specified. The bill would make legislative findings and declarations in this regard.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the
2following:
3(a) Over 80 countries utilize microchip technology for credit
4cards, including, but not limited to, Canada, Mexico, Brazil, and
5countries throughout Europe and Asia.
P2 1(b) The United States is one of the few remaining countries that
2relies almost exclusively on magnetic stripe technology for credit
3and debit cards.
4(c) Credit and debit cards with microchip technology are
5preferred to magnetic stripe cards because identifying information
6is encrypted on an embedded microchip, which is more difficult
7to counterfeit than a magnetic stripe.
8(d) Adoption of microchip technology in Britain has helped
9reduce fraud from counterfeit cards by 70 percent from 2007 to
102012, inclusive, according to the UK Card Association.
11(e) By contrast, breaches have more than doubled since 2007
12at retailers in the United States, affecting more than 5,000 records,
13according to a survey by the Ponemon Institute, research firm
14located in Michigan.
15(f) In 2012, United States merchants and banks suffered losses
16of $11.3 billion due to credit card fraud, or five cents ($0.05) on
17every one hundred dollars ($100) spent, according to the Nilson
18Report, a payment-industry newsletter based in California.
19(g) If credit and debit cards with microchip technology were
20used in the United States, fraud losses could be reduced by
50
21percent, according to estimates by Aite Group, an independent
22research and advisory firm focused on business, technology, and
23regulatory issues and their impact on the financial services industry.
24(h) It has been widely reported that retailers, banks, financial
25institutions, and credit unions are planning on voluntarily adopting
26microchip technology beginning in October 2015.
Title 1.3E (commencing with Section 1748.70) is
28added to Part 4 of Division 3 of the Civil Code, to read:
29
A bank, credit union, or financial institution shall
33issue a credit or debit card with microchip technology, as follows:
34(a) To a new cardholder whenever issuing any credit or debit
35card.
36(b) To an existing cardholder only when issuing a new or
37replacement credit or debit card in the ordinary course of business.
A retailer shall utilize a credit or debit card scanner
39that accepts a credit or debit card with either a magnetic stripe or
40microchip technology or any other technology that is generally
P3 1accepted within the payments industry as being equally or more
2secure than microchip technology for card-present fraud prevention.
This title shall become operative on October 1, 2015.
O
99