Bank of America said it plans this week to begin issuing customers new debit cards embedded with microchips designed to better protect consumers from fraud.
In an announcement Tuesday, the Charlotte, N.C.-based bank said the chips will be in all debit cards issued to new consumer and small businesses customers. The bank said existing customers will be given them when their old debit cards are replaced at expiration or for other reasons.
Bank of America said it will be the first major U.S. bank to provide debit cards with the chip technology.
The bank began issuing credit cards with the chips to consumers in 2012.
The bank's roll-out of the cards comes as banks and other credit card issuers are seeking to avoid liability for fraud affecting consumers.
Visa, MasterCard and other card networks could hold banks liable for fraud if they haven't made chip cards available to consumers by an October 2015 deadline.
Businesses that don't upgrade their card readers by that time to accept the new cards could also be held liable for fraud. Bank of America's new cards will include the familiar black, magnetic stripe on the back so they can be used at businesses that have not yet upgraded to the new technology.
Bank of America said the chip in its cards will encrypt transaction information. Each time the card is used, the transaction data will change.
That is designed to make it more difficult to copy or counterfeit a debit card, reducing the amount of purchases made with counterfeit cards inside stores.
But some industry officials expect the amount of purchases made online using stolen consumer data to rise once chip-based cards are in wider use, as crooks seek other ways to use the data.
Initially, Bank of America limited the chips to certain types of credit cards, such as those associated with rewards programs. In May, it expanded its roll-out of chip cards to the majority of consumer credit cards when new accounts are opened or when cards are reissued to existing customers.
Other banks also plan to begin issuing debit cards with the chips.
San Francisco-based Wells Fargo, which is already issuing chip-based credit cards to many consumer, small-business and commercial credit card customers, is testing the chip technology on debit cards in preparation to issue them on a broad scale in the coming year.