Why MasterCard Is Moving To Certify Instant Issuance

MasterCard International plans by the end of the year to have in place a program to certify instant card issuance activity in the United States. The bank card company is testing an instant-issuance certification plan in Brazil now, and is concerned enough about perceived risk in instant issuance that it may have a certification program in place in the U.S. even sooner than the fourth quarter. “I don't want to wait until the fourth quarter, and I certainly don't want to wait until past the fourth quarter,” says John Schettino, vice president for security and risk services for global credit and debit products for MasterCard. Under the plan, the network would certify cobranded programs in which member banks issue on-the-spot MasterCard products through cooperating retailers. It would apply to any type of card that bears the MasterCard logo. Although Schettino concedes there is little instant issuance of MasterCard cards now, he says members are showing a lot of interest in starting such programs and are asking MasterCard about its stance toward them. In instant-issuance programs, customers may apply for a card at a retail location and receive a fully embossed and encoded card within minutes. Merchants use card blanks as well as personalization, embossing, and encoding equipment maintained on their premises. While this allows banks and retailers to get cards into consumers' hands immediately, it poses security risks, says Schettino. He says MasterCard's concern lies in the fact that such programs essentially set up retailers as card vendors without the rules and certifications surrounding card manufacture. “We can't let retailers go at it freely and require card manufacturers to dot every 'i' and cross every 't,'” says Schettino. MasterCard's program would involve on-site inspection of a single location in a retail chain, leading to a decision whether to certify instant-issuance for an entire chain. Afterwards, Schettino says, MasterCard would keep tabs on issuance by visiting selected stores in the chain for observation without the foreknowledge of the merchant. The certification test going on now in Brazil involves instant-issuance of a MasterCard cobranded by a member bank with a local retailer. Because he's concerned that member banks may start programs before the card company has a chance to set up its certification program, Schettino wants to move fast. “We don't want to let anyone get started without best practices,” he says. “You're talking about risk galore.”