If Bank of America Merrill Lynch expects to continue its scheduled distribution of chip-and-PIN smart cards to commercial clients in the United States, it intends to provide a significant amount of education to those clients about how the card works overseas.

In addition, bank executives indicate it will also serve the bank well to inform those clients about intentions to pursue future payment technologies.

BofA has informed its commercial clients of plans to proceed with a timetable over the next few years that first includes chip-and-PIN contact cards for corporate business travelers. And it eventually will involve widespread distribution of contactless cards to customers and support of mobile Near Field Communication capabilities if the industry ever moves away from issuing plastic.

To keep the client education process in the forefront, executives from BofA Merrill Lynch, Bank of America Corp.’s marketing name for its global banking and markets businesses, and other industry experts met with representatives of more than 180 BofA commercial clients earlier this month in San Francisco during a conference titled “Plastics and Beyond: Exploring New Ways to Pay.”

BofA announced last November it would provide chip-and-PIN cards starting in January for U.S. corporate clients involved in worldwide business and travel (see story).

Feedback from clients at the conference reaffirmed the bank’s decision to issue chip-and-PIN cards for its large corporate and commercial clients because it is has become the payment standard in much of Europe, Kevin Phalen, BofA Merrill Lynch head of global card and comprehensive payables, tells PaymentsSource.

BofA Merrill kept the chip-and-PIN momentum going at the conference, announcing its global card would be available in more than 70 countries by the end of 2012, with distribution occurring in Europe, Asia, Latin America, Japan, Austria, Denmark, Norway, Portugal, Sweden and Colombia.

“In positioning our card for U.S. cardholders, they have to have an understanding of what is happening in payments around the globe,” Phalen says.

An understanding of global payments is helpful, but clients don’t have to be experts about which segment of which country accepts which type of payment, Phalen adds.

The BofA Merrill Global Corporate Card, issued as Visa Inc. or MasterCard Worldwide brands, makes those payment-acceptance concerns diminish because it can initiate chip-and-PIN, chip-and-signature or mag-stripe transactions, Phalen notes.

“We tell our clients not to worry about what is happening in the various markets around the world [regarding payment technology] because we’ll worry about that and deliver what they want and need,” Phalen says. “I believe we are making great strides in having our card ready for use anywhere.”

And that eventually would include the U.S., where debate continues among issuers, processors and merchants as to whether chip-and-PIN or chip-and-signature will be the standard when EMV takes hold, Phalen adds (see story).

BofA first is focusing on chip-and-PIN smart cards for international travelers because those travelers “feel the pressure and pain of needing a card accepted overseas,” Phalen notes.

As EMV smart cards become broadly accepted in the U.S., the bank would make the cards available to all customers, especially on card re-issuing cycles, Phalen adds.

When the migration of EMV to the U.S. gets in full swing, BofA Merrill Lynch will benefit from the expertise of its payments processor, Total System Services Inc., or TSYS, Phalen suggests. “We have worked with TSYS in Europe as our provider, and they bring a lot of knowledge from a systems perspective regarding chip cards,” he adds.

The conference addressed mobile payments because the bank believes it is important that clients understand how the move toward integration of card data into a mobile device could affect their businesses, Phalen says.

“I wouldn’t have expected as much adoption as we have seen in using card data on laptops and PCs, but now that same data will move into mobile devices,” Phalen says.

The bank wants clients to understand the benefit of exchanging data through mobile devices, Phalen suggests.

“When you are able to exchange data between devices, the bank can provide information to the client where they need it and when they need it in order to conduct their business,” he adds.

Merchants should embrace chip-and-PIN as a fraud-prevention measure, while cardholders must learn how to use the cards at the point of sale, Phalen notes.

“The conference [for large corporate and commercial clients] underscored that cards are a core business at Bank of America, and we wanted to show our clients that we are investing globally and investing directly into this technology,” Phalen says. “We felt very good about being the first to demonstrate to them how chip-and-PIN cards will work.”

While it has become common for major banks to issue EMV cards to overseas travelers and corporate clients, BofA appropriately informed its clients about what could occur next in payments technologies, merchant acquirer consultant and industry researcher Paul Martaus, of Mountain Home, Ark.-based Martaus & Associates, tells PaymentsSource.

“This EMV push came about, at least partly, when Visa felt the U.S. was behind the curve with smart cards, specifically for the upscale traveler,” Martaus says. “Now, because they were a little slow at the start, Bank of America wants to stay ahead of that curve.”

Too many U.S. travelers struggle overseas without EMV cards, especially at unmanned point-of-sale stations, such as transportation ticketing devices that accept only chip-and-PIN cards, Martaus says.

While BofA’s strategy with smart cards, NFC and mobile payments appears solid, the bank could serve its customers well by “eventually creating a prepaid chip-and-PIN card,” Martaus suggests. “That would bring the regular Joe customer into using the cards, and that could be very good,” he adds.

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