xyz123

...I think you're not living in the USA right now. The fact is the last time I had a credit card leave my hand is...I don't know when. Even in those majority of merchants here that have not turned on their emv terminals to take chipped cards, for the most part you swipe, sometimes a receipt is printed to sign, sometimes you sign on the signature pad in front of you, much of the time for small purchases you do nothing. The big exception is restaurants which has raised several interesting questions. In America, and I am sure in other places, once you are in a restaurant which is not really a fast food restaurant say like Red Lobster or Denny's, when the check arrives in a wallet type thing, the expectation is your card will be taken to some dark room in the back, run through the terminal (either swiped if magnetic strip or dipped if the restaurant, and few have, has activated chip processing and then 2 receipts are printed, one for you to sign and the other for your copy. But then the question comes up about tips. In the USA at present with the magnetic strip still being king, you can add a tip and then you sign and when the waiter gets back to wherever, the tip is added on. The question is can this be done with chip cards...if the card is chip and signature perhaps although that still has to be worked out. With chip and pin cards, well the whole thing becomes messy so much so that there is some question that even if the USA were to adopt chip and pin, restaurants would be forced most likely to use pin bypass because once the pin is entered, well the game is over or at least the transaction is. We know the solution is the portable wireless terminals in use through much of Europe; of course in many European countries there is no tipping, service is included. In Britain, at many restaurants, one does tip (10-12% is the norm I think) and agt least at one restaurant chain, Wagamama but I am sure others, after the card is either swiped or dipped, the waiter hands you the terminal and tells you to follow the directions (do you want to tip, press the green button...how much is the tip enter the amount...is the new amount correct...and then you either are told eto enter your pin if it is a pin preferred card (rare of course in the USA) or hand the terminal back to the waiter). The waiter presses a button and either hands you a receipt to sign (never in my experience asking to see the signature) or hands you a receipt if it is a pin transaction.

But of course that means even more expenses to restaurants and I suspect they will resist. As far as your point is concerned, the trick is if the clerk wants to check signatures which is indeed pretty common in Europe, you hold the card and show the clerk the back. I have never had a clerk rip the card out of my hand or anything like that. The bigger problem with chip and signature is sometimes you are asked for ID and that is a touchy subject to me. In the USA, merchant agreements allow merchants to ask for ID but prohibit a merchant from refusing to complete a transaction for failure to produce ID unless the card has not been signed or the signatures do not match. I do not like to show ID and think it is foolish when some people think they are smarter than others by writing see ID on the signature panel. Technically that invalidates the card as the agreements specify the card must be signed and as we've said, nobody in the USA checks signatures anyway. My objection to showing ID is that although chances of this happening are slight, this is a way a crooked clerk or waiter can get some personal information about you, turn it over to some identity theft ring and then you have a real problem, much more serious than having your credit card account hacked. Unfortunately, I do not know if this agreement carries to parts outside the USA and even some dumb states in the USA prohibit the card networks from enforcing the you don't have to show id regs. Usually doesn't happen when using a pin which is one of the reasons I prefer pin preferred cards.

Sarastro

<i>...I think you're not living in the USA right now. The fact is the last time I had a credit card leave my hand is.</i>


I am visiting the USA today and the last time someone took my card to process it was yesterday. This happens with great regularity in restaurants, hardly ever in stores.

Still, I agree with your concerns about a clerk or sales person handling a card, even to verify a signature. This is a good way to have your personal information, and card number, compromised.

xyz123

I agree completely with you about restaurants as I explained but other than that, it is rare my card leaves my hand to check signatures. BTW how many times hass anybody checked your signature?

Michael

<i>The European procedure of never handing over a card to be processed is another huge safety advantage and protection against fraud not found in the USA.</i>

I suspect that this type of fraud is minimal compared to hacking and stealing on-line information from sites that are completely out of the customer's control. Is the chip and PIN card really better in that respect?

Sarastro

<i> Is the chip and PIN card really better in that respect?</i>


If a clerk or sales person never sees nor handles your card, it makes copying your name, card number, expiration date, and the 3 digit security code, impossible.

There is a definite security risk when your card is taken from you, at at restaurant for example, for processing.

Michael

<i>There is a definite security risk when your card is taken from you, at at restaurant for example, for processing.</i>

The risk is minimal, in my opinion. In the last year, I've had to change my credit card twice, each time because of on-line hacking and fraud.

The solution to the problem you give is to have hand held readers that can be taken to the table. Those in Europe can take the swipe card; although I admit into running into a single instance where the swipe option was not available.

xyz123

The risk is small, quite true but it does happen. Agreed the solution are the wireless portable terminals almost universally found in Europe but...

as with everything else associated with this in America the big issue is MONEY. Who is going to pay for all these portable terminals? Same reason USA resisted emv for all this time up till now. Do bear in mind, the merchant is not liable nor is the customer. The banks? They make millions and millions on their plastic card operations and the fraud is only a small cost of doing business.

Michael

<i>
as with everything else associated with this in America the big issue is MONEY. </i>

From what I heard or read (can't remember which) that is the reason we are moving to chip and signature cards. Banks charge merchants a much lower rate on ATM/Debit cards, and if the credit cards were Chip & Pin, they would then work like ATM/Debit cards with the same <b>lower</b> charges levied on the merchants.

tom_mn

Those wireless credit card machines are standard in Puerto Rico, for what that is worth. I have no idea why that part of the US has the machines, but maybe other places have them, too.

Sarastro

<i>Do bear in mind, the merchant is not liable </i>

Have you ever actually contracted with a card processing service as a merchant? I can assure you that banks will indeed charge back to the merchant any fraud that they can. In the past, I have lost a lot of money on credit card charge backs that were determined to be fraudulent by the card issuing bank.

Chip & PIN transactions would have eliminated much of the loss. Cards are easy to duplicate and chipped cards can be duplicated though it would require a very sophisticated thief.

There are a lot of ways to exploit credit cards and it happens a lot more often than some here would like to believe.

Banks, knowing how may credit cards many US customers carry in their wallets, don´t want us to use PINs because they fear that will lead to their cards being unused. It´s a lot easier to remember one or two PINs than 5 or 6 which is the number of credit cards that most Americans carry.

xyz123

sarastro...not trying to be argumentive with your last post but the whole broo ha ha here is that as of 01 October, there will be a liability shift to the merchant if they don't do an emv transaction with an emv card. I interpret that to mean that currently they have very limited liability for fraudulent charges. I'm not questioning you or anything like that but there seems to be a contradiction here somewhat.

Sarastro

xyz123, I can´t really say what will happen 1 Oct because I frankly don´t follow this subject closely anymore. I now live in Paris and my orientation is a bit different. The bulk of my asset is in the USA so I am, just like many other posters, concerned about exchange rates, credit card acceptance and FTFs, and finding great dinning locations.

Michael

<i>Chip & PIN transactions would have eliminated much of the loss. </i>

Could you please explain how this would have eliminated on-line fraud?

xyz123

It won't eliminate online fraud. As a matter of fact, some in the industry believe that credit card fraud will shift more to online fraud than card is present fault. Much of today's card is present fault is due to the ease of counterfeiting magnetic strips. Once the magnetic strips go away, then the attention of the credit card hackers and the like will turn to counterfeiting the emv chips and to online fraud. The whole spat over whether to go chip and signature or chip and pin is really quite futile; as I've said I would have preferred pin preferred cards but recognize that while there is somewhat more security with pins than the non existence of any security with signatures, just the emv chip alone will eliminate most of the card is present fraud. At that point, the banks will turn their attention to online fraud. Can retina scans be far behind?

xyz123

Sarastro...me too as far as my desires when I visit Paris. Just to understand because it is important. Several years ago, the credit card network set a deadline of 01 October 2015 for what is called a liability shift. After that, according to the regulations that have been issued, if a merchant accepts a credit card containing an emv chip and processes it via the magnetic strip or even by just entering the account number, it will be the merchant that is liable for any fraud. The interesting this is we are now only a month out, and the vast majority of merchants here even though they may have replaced their terminals with terminals capable of processing emv chip transaction, very very few have turned them on. Then there are those who haven't replaced their terminals yet. We have a long way to go.

Sarastro

<i>Could you please explain how this would have eliminated on-line fraud?</i>

The losses I incurred as a merchant were not on-line transactions and everyone of them, as far as we were able to determine, could have been avoided with chip & PIN credit cards. I have made no claim, in any post, that chip & PIN credit cards would eliminated on-line fraud.

Many European merchants require SMS verification of any on line purchase attempt.

xyz123 - I agree that the US does have a long way to go with credit card security and chip & PIN implementation. Once a merchant understands the new rules and incurs loss due to his not having EMV equipment, the cost of that equipment will probably seem very reasonable.

kerouac

Obviously, the percentage of online fraud will increase as physical fraud in shops or automatic machines becomes more difficult. It is a zero sum situation.

However, the vast majority of my online transactions in Europe are now governed by an SMS code that I receive on my mobile phone within 10 seconds of engaging in a purchase. If I do not enter the code within two minutes, the transaction is cancelled. Anybody wanting to commit a fraud with my card also has to be in possession of my mobile phone.

xyz123

Great idea and if I were in charge, would do it in a nanosecond. But...if you've been reading on various blogs and the like, the US banks make a mint on their plastic card operations and look on fraud as a small price of doing business. So anything that would make it even marginally more difficult to use the cards will not go over well. It is a no win situation for the customers and the merchants.

Michael

<i>the vast majority of my online transactions in Europe are now governed by an SMS code that I receive on my mobile phone within 10 seconds of engaging in a purchase.</i>

And what if you do not have a cell phone?

kerouac

People like that no longer count. I hope that you know that capitalism is the opposite of equality.