Last year, credit card issuers finally introduced “chip” credit cards to the United States. It’s been a painless process for the most part, but now Walmart is suing Visa over the technology, claiming it’s not secure for customers.
EMV is meant to be more secure, and while it will incorporate PINs in the future, for now, chip-enabled credit and debit cards will work just fine with a signature.
Last year, Walmart tried to require debit card customers to pay the old way: with their PINs. Visa came back and demanded they allow signatures for those cards via the new chip technology. Walmart spokesperson Randy Hargrove explained the issue:
PIN is the only truly secure form of cardholder verification in the marketplace today, and it offers superior security to our customers. Visa has acknowledged in many other countries that chip-and-pin offer greater security. Visa nevertheless has demanded that we allow fraud-prone signature verification for debit transactions in our U.S. stores because Visa stands to make more money processing those transactions.
Walmart’s outrage probably has less to do with security and more to do with money, though. It’s cheaper for Walmart to verify via PIN than signature. According to the Wall Street Journal, signature verification costs about five cents more per transaction. In other words, the new technology encourages customers to use their bank cards as credit instead of debit, which is more expensive for Walmart.
It’s easy to see why Walmart is upset—this new technology is costing them money, and the credit card companies still haven’t rolled out cheaper, more secure PIN technology. Their suggestion that customer security is at risk, however, is a little misleading.
Walmart’s statement suggests Visa puts customers’ security at risk by allowing signatures instead of PINs for debit card transactions. It does kind of suck that we’re still waiting for full blown “chip and PIN” technology, which is supposed to be even more secure, but the new credit cards aren’t any riskier than your old ones.
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