Close to two-thirds of U.S. consumers (62 percent) believe that current credit cards being issued by banks are not providing sufficient protection for card data or fraud prevention, according to a new survey by the National Retail Federation. The new EMV cards being issued do not require a PIN but are still be validated by signature.
October 1, 2015 marks the transition date for credit card liability, when that responsibility for fraudulent card transactions shifts to merchants without EMV-enabled systems. According to the NRF, many retailers view the liability shift is unfair since the chip reduces banks’ exposure to fraud while the lack of a PIN leaves retailers exposed to fraud.
And consumers are also concerned, the survey found. “Consumers are worried that chip-and-signature cards really amount to chip-and-chance,” NRF Senior Vice President for Government Relations Mallory Duncan said. “The chip cards are a step forward but shoppers are concerned that they don’t go nearly far enough. Unless the new cards require the use of a PIN, they will only provide half the safeguards needed to stop increasingly sophisticated criminals. The card industry’s refusal to give consumers the full protection they want continues to be a huge disappointment.”
In the survey, 62 percent of respondents reported that they would prefer chip-and-PIN cards over cards that just use chip and signature, and 63 percent said chip-and-PIN cards provide more data security than those that don’t. That preference was even higher among Millennials, at 71 percent of those between the ages of 18 and 24 and 66 percent for those ages 25-34.
And while some banks have argued that consumers don’t want to have to remember a PIN to justify the lack of implementation, the survey found 83 percent of consumers who say a PIN is more secure said that it would be beneficial, even if it meant remembering separate PINs for each card.
To date, 71 percent of consumers with a credit card have at least one chip card in their wallets, although just 43 percent of credit cards are chip cards since most consumers have more than one card. Only 47 percent of consumers with a chip card have used it in a chip reader. The online survey of 2,035 U.S. adults ages 18 and older was conducted for NRF August 27 to September 2 by ORC International.
The transition also has required retailers to invest in new card readers, which average about $2,000 each when related software, equipment, installation and other costs are included, or an estimated $35 billion nationwide. And while most major retailers and many smaller merchants have installed the equipment, many have reported that activation has been held up by bottlenecks, placing many retailers at risk for liabilities through no fault of their own.
“The chips partially address the issue of counterfeit cards, but do nothing about lost or stolen cards because thieves will still be able to sign any illegible scrawl to ‘prove’ that they are the cardholder,” Duncan said. “More importantly, sophisticated criminals can circumvent the chips, so a chip alone is not foolproof. A PIN is a secret password that makes the card useless to a criminal whether the card has a chip or not.”
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