Ding ding. Wal-Mart and Visa are back in the ring, exchanging blows around payment related issues. The latest bout coming around the EMV transition and chip-enabled debit cards.
When looking at the chip-enabled debit card debate, it’s important to understand the entire scope of how the U.S. rolled out the EMV conversion, with a specific focus on security. The transition to chip-enabled cards has been a long, arduous process in the United States. Even though other countries have successfully made this transition, the U.S. has not followed the same blue print. Most notably, the majority of banks opted for chip-and-signature cards as opposed to chip-and-PIN. The chip-and-PIN was designed for a reason – for layered protection. A chip-enabled card that is incredibly difficult to counterfeit + a secure PIN set by the cardholder. If the customer is simply asked to insert their chip card and provide a signature, one of the layers of security is being completely ignored.
Therefore, whether it’s a debit or credit card – for the most secure card present transactions – a chip-and-PIN card should be used.
Unfortunately security is not the only concern. Merchants and card issuers have financial implications and contractual obligations that drive many of their decisions. Customer experience has also been cited as a reason why banks would like to defer to chip-and-signature cards, claiming shoppers don’t want to have to remember another PIN and prefer providing their signature.
At Radial, our clients process transactions in the card not present space. If you think that means the EMV conversion doesn’t affect us – think again. The increased security measures being taken with EMV (whether chip-and-PIN or chip-and-signature) will make it more difficult to perpetrate fraud using the physical card at brick and mortar stores. Criminals will not simply wave the white flag and call it quits. They will focus their enterprise online, attempting fraudulent activity through digital channels. Data breaches and bourgeoning technology have already provided criminals with an unprecedented arsenal of information. The EMV conversion will simply fan the flames for card not present fraud, making an already challenging problem that much harder to manage.