USA is NOT going Chip and Pin

Old Jul 5th, 2014, 01:12 AM
  #1  
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USA is NOT going Chip and Pin

Lots of misinformation out there on this. It has now become evident that while the USA will be migrating to emv chipped credit cards probably no later than October 2015, the die has almost certainly been cast that the card verification method in the USA will not be chip and pin (despite what some banks may falsly claim) but chip and signature.

Recently, USAA which had been offering on its emv chipped mastercard a true chip and pin card has joined the rest of the USA banks and its newly issued cards no longer have chip and pin as the primary verification method but rather chip and signature. That means there is only one US bank, the UNFCU that is issuing a true chip and pin credit card and the prospects are there will not be any in the foreseeable future.

Visa and mastercard claim chip and signature is nearly as effective as chip and pin in eliminating card is present fraud. Of course, they admit, chip and pin is more secure but the added security is simply not worth both the costs of converting to chip and pin or what customers want i.e. they don't want to have to memorize 3 or 4 different pins for their different cards. And besides, they argue, since merchants are required to honor all valid cards, this will not be a problem.

Of course we do know there are some merchants who whether mistakenly or not will not honor a credit card without a pin believing it increases their liability. And even some cards which advertise themselves as chip and pin (say Andrews FCU) are really chip and signature priority and the consumer cannot control which verification method is used nor can the merchant. If the pos terminal accepts chip and signature cards, and almost all do, and the merchant says he or she can't honor the card, you're out of luck.

Visa and mastercard also admit there might be a problem at unpersonneled kiosks but hey, the cards will worl 99.7% of the time. Of course that's little comfort if you're almost out of gas on a Sunday in France and all gasoline pumps in your neck of the woods only take offline pin equippped cards. Do tell the mpum that visa and masterfard say you have to honor my card. I would be very interested in what the answer will be.

This is the latest in the never ending war to have the USA join the rest of the world in credit card security. It is not exactly what many people were hoping for.
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Old Jul 5th, 2014, 03:17 AM
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Well I know for a fact that chip and signature cards will not work in most situations in the Netherlands. Hotels may be able to still cope with a signature but no shops and most restaurants won't. No machine can. We use PIN exclusively, there just isn't the option for a signature.
An increasing number of shops have a real problem with cash payments too - since it costs them to deposit cash in the bank. We use PIN and Chip not only for credit cards but for our debit cards too, and are increasingly becoming a cashless society.

If millions of people in the world can manage to remember several PINs why can't Americans?
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Old Jul 5th, 2014, 03:46 AM
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1. Don't shoot the messenger. I agree with you about pins but this is the garbage being thrown out by the banks and visa and mc regarding this. Of course, it isn't the extra cost for the hardware necessary to implement c&p or so they say.

2. I'm not a technology geek or anything but it seems to me that it is not the terminals in Holland but rather a conscious decision by merchants not to honor signature based verification. Many on flyer talk have been able to use a little device to read the order of cvm's (card verification methods) on their card and they are prioritorized and in theory if priority #1 doesn't work, then priority #2 is tried (by the terminal). Many of these cards do have offline pin capabilities but that's a lower priority than chip and signature. The problem is once the pos terminal hits on a cvm that works, it doesn't search any further even if the merchant, illegally according to visa/mc, at that point manually voids the transaction.

Visa and mc claim they are working with various local regulatory agencies to make it clear to merchants they must honor chip and signature cards. Will that work? That, my friends, is the question for which I have no answer.

BTW if online pin for purchases is a cvm, then contrary to what I and others have thought, the cash advance pin will work if that is reached on the priority list. Last month, at CPH airport, I used my c&s B of A card to buy my 24 hour Copenhagen transport pass at a kiosk. It asked for my pin, I entered the cash advance pin (an online pin) and it went through.

Just a mixed kettle of fish.
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Old Jul 5th, 2014, 03:53 AM
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"Visa and mc claim they are working with various local regulatory agencies to make it clear to merchants they must honor chip and signature cards. Will that work?"

If merchants want U.S. customers, they'll find a way to make it work. I see no reason to order Xanax over this.
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Old Jul 5th, 2014, 05:06 AM
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Just a thought: How much would you pay for a true chip and pin USA based credit card? After all, someone has found a way to monetize many previously free services here. How many potential travelers would pay, say $19.99, for a one year chip and pin card? Would that bring out some entrepreneur willing to provide them?

Or, sort of like having your cell phone unlocked, could you have your bank reprogram your chip and signature card to chip and pin first priority while you are travelling? I bet they could charge a small fee, or eat the cost from their 3% foreign transaction scam.

As I said, it's just a thought, but if there is a profit, will they come?
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Old Jul 5th, 2014, 05:59 AM
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One of the credit card companies I use has sent me a chip and signature card. I have requested a chip and pin card from my broker and I understand it will arrive by the end of this month. These are the only facts I can state. Everything else is based on what I read and hear. It's just my thought process but I believe credit card companies will issue chip cards to their top tier customers to keep them on board and then it will filter down to all credit cards.
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Old Jul 5th, 2014, 07:11 AM
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Of course nothing would surpise anybody as our American banks do not miss any chances to stick it to their customers with ridiculously high fees which are waived for their high rolling customers. So I'm not questioning what you're saying. However, just one other thought.

What makes you so sure that the so called chip and pin card you think you're going to receive from your broker is a true chip and pin card (offline pin primary card verification method). Just as an example, Andrews FCU advertises itself as a chip and pin card when in reality, in its cvm, signature verification is primary and no matter what they say it's a chip and signature primary verification card. I will give Barclay's Bank USA some credit for properly labeling their recently issued arrival card as chip and signature with chip and pin capabilities. That seems to be what we're going to get here. And as I said, it probably doesn't make a big difference at personneled pos terminals although there will be isolated situations where merchants may refuse to honor the card despite the fact their terminals would process the transaction but the whole growing situation with unpersonneled kiosks may be a problem.

As for myself, I don't worry about the security question. I have zero liability for fraud anyway and emv chips while helpful against card is present fraud, they are useless against online fraud. Just this week, I got a call from Fidelity that somebody had charged $2000 on my card online and had tried for another $1000 which they declined. So now I have to wait for the replacement card (in and of itself not a big problem but it's my favorite card as I get 2% cash back on all purchases but I can use other cards and at least get 1%) and of course I have to go through the list of merchants who automatically debit the card and notify them of the new number. But the card has an emv chip but it didn't prevent the hacking of the account online. So the security issue doesn't affect me. I want to know that my card will be honored 100% of the time when I wish to use it, not 99.7% which visa is saying chip and signature will do almost as good as chip and pin. That's where the problem comes in!
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