In an attempt to increase the security of American consumers, the Federal Reserve, the system which maintains the safety and soundness of our banking system, is calling for the new chip credit cards that are being issued to now be issued with accompanying PINs. Although replacing magnetic stripes with chips is progress, the chip-and-signature cards being issued by U.S. banks are less secure than the chip-and-PIN cards standard in other parts of the world, suggested Federal Reserve Gov. Jerome Powell in a speech, according to an article by American Banker.
Powell’s words echo what retailers have been saying all along, which is that outdated technology has been putting American consumers at risk for far too long and that chip-and-PIN card technology is the most secure standard of payment.
Retailers are investing billions to implement new chip-enabled card readers in stores nationwide. They’re asking banks and credit unions to meet that commitment by issuing new chip cards with PINs.
Some 61% of finance professionals believe Chip-and-PIN cards will fight fraud best. “61% of survey respondents report that Chip-and-PIN validation will be most effective in preventing credit/debit card fraud.” (“2015 AFP Payments Fraud And Control Survey,” Association of Financial Professionals, Accessed 3/26/15)
Retailers are spending billions to upgrade terminals for greater payment security. “The cost of the transition to chip cards for financial institutions and businesses that use [point of sale] readers will be significant … Most industry observers agree that it will cost between $6 billion and $8 billion. Of that amount, 75% is likely to be paid by merchants, making the transition three times as expensive for them as for the issuers.” (Patricia Moloney Figliola, “The EMV Chip Card Transition: background, status, and issues for congress,” Congressional Research Service, 2/26/15)
RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution center.