Many are Declaring the Chip-and-Signature as ‘Worthless’

Jun 23, 2015

Cyber attacks continue to be a major problem for U.S. companies. The majority of other countries have already implemented the chip-and-PIN or EMV-enabled cards while others are in the process of doing so. This new method promises to have a big impact in the prevention of cyber attacks. The U.S., however, is far behind.

According to an article by Forbes in October 2014, President Barack Obama signed an executive order that demanded US government bodies to move towards chip-and-PIN credit cards and terminals. This would replace magnetic strip based technology. While steps have been taken in that direction, the US is still more than a decade behind other developed countries.

Fast forward to April of 2015. The process is still ongoing. Not all involved are happy with the changes that are being made and the impact it will have on their businesses. At the Electronic Transaction Association’s Transact conference that was held the end of March through the beginning of April, the senior vice president and assistant treasurer for Wal-Mart, Mike Cook, shared his doubts.

He expressed the strong belief that migrating to the chip-and-signature card instead of going to PIN “is such a joke” and “barely an improvement over magnetic-stripe cards”. He also pointed out that, during the Target and Home Depot breaches, not one PIN debit card was reissued. The reason being that the card number was worthless to the hacker without knowing the PIN that accompanied it.

Why has US issuers of chip-and-signature cards increased over the chip-and-PIN? The most obvious answer appears to be marketing. The argument is that the extra security offered by PIN is not worth the expensive software upgrades. The vice president of risk products for Visa, Stephanie Ericksen, expressed that she did not see the need for PIN due to the superior technology of other methods, like Apple Pay, that are emerging and are expected to become mainstream in the next few years.

While the debate continues, the need remains for merchants to have a second layer of security for high risk transactions. Without a PIN or password, merchants do not have that. So far, it would seem that the majority have sided with Cook’s feelings on this issue. The findings of the 2015 AFP Payments Fraud and Control Survey revealed that 92 percent of respondents felt that EMV cards will considerably reduce fraud at the point-of-sale. The survey further revealed that 61 percent felt that chip-and-PIN will be much more effective than the chip-and-signature method.

While decisions are being made and discussed as the EMV deadline of October 2015 quickly approaches, merchants continue to be wary of cyber attacks and their negative effects on their businesses. Merchants that have suffered from delinquencies, bankruptcies and other irregularities or erroneous items on credit reports can still find help.

Fortunately, alternative lending sources like eMerchantBroker specialize in offering merchants bad credit merchant accounts. With the increase in cyber attacks, merchants that find themselves in a tough situation can still find the solutions and protection they need. In addition, the application process for such merchant accounts are simple, fast and hassle-free; thus, providing merchants with a great opportunity to get back on their feet while also securing safe processing solutions.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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