A heated debate is occurring amongst America’s card issuers and retailers. This year, it was announced that the U.S. is backing a chip-and-signature system to address issues of consumer financial security. Many retail executives and merchant advocates believe the U. S. treasury should have backed a chip-and-PIN (PIN CVM) system instead. They believe this system would have almost guaranteed the elimination of consumer credit card fraud, while some credit card issuers believe the added security of PIN authentication is not worth the cost of upgrades in the wake of Apple Pay and other NFC payment methods.
Many advocates of PIN CVM say that the belief that this type of payment method is too expensive is false. Although merchants may need to pay for software upfront, regions that use PIN CVM note that the money saved in rectifying instances of fraud by retailers and card issuers more than pays for these initial costs in the long-term.
PIN CVM advocates also say that it is the most secure type of payment process. Cardholders are able to make online (when the terminal can dial out to connect to an acquirer in order to process a card transaction and request authorization) and offline payments (when the terminal doesn’t dial out for authorization). If signature is the CVM, consumers will have problems when doing offline transactions. Cards often come with a set limit to the amount spent without signature verification. If a payment exceeds the limit, then the card could be declined.
To further complicate matters, credit card issuers are at odds to which methods they see as best. Visa thinks that chip and signature as a short term solution, while Discover, American Express, and MasterCard are pushing for PIN CVM.
In the end, the business models of each banking institution will decide which EMV payment solution they endorse. If consumer security and the ability to make online and offline payments is important to a banking institution, then PIN may be the best solution. If less security and the possibility of rejection during offline transactions is not a real concern for banks, then the signature system is a viable solution.
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