Major retailers in the United States have continued to urge banks to adopt the use of PINs with new chip-enabled credit cards to prevent counterfeit card fraud.
The banking industry, however, sees no need to invest in PIN technology, resulting in reluctance to the change.
As of today, only one PIN credit card is available through a major U.S. retailer, a MasterCard through the major retailer Target which is issued through the Toronto Dominion Bank. Walmart has plans to follow Targets lead, but has said they’ve faced obstacles with its credit card partner, Synchrony Financial, not being able to handle PINs on credit cards.
This impasse has come after the recent implementation of new EMV chip-enabled credit cards being issued to consumers nationwide. But so far, only about a third of merchants are actually using the chip technology, many believing this is due to part to retailers typically halting upgrades during the busy holiday shopping season.
Even though the Chip & PIN implementation has lowered fraud over the last decade in Europe, U.S. banks still favor using chip cards with signatures, saying PINS provide little to no benefit in combating the $7 billion in annual U.S. card fraud.
Banks feels that PINS would only provide extra fraud protection when criminals try to use lost/stolen cards, a situation that accounts for only 14% of fraud. They instead feel that a more effective approach would be for retailers to embrace tokenization & encryption of credit cards.
The majority of retailers have not even began to use the chip technology on credit cards and instead continue to rely on the magnetic strip. Some retailers are even questioning why they should spend billions of dollars to enhance their POS systems if banks refuse to add chip-and-PIN technology.
All this confusion has come from a string of inconsistent announcements, like the FBI’s PSA incorrectly suggesting all EMC credit cards use PINs, and the Chase credit card representative who wrongly tweeted that the company would soon issue chip & PIN credit cards. Even worse, an unnamed retail industry executive has said that retailers fear that the PIN adoption could result in slower lines & lost sales from customers who forget PINS.
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