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Table of Contents

Lead Story

Payments 2010: Fast forward to the future


Industry Update

Black Friday, Cyber Monday post promising sales

MasterCard, Visa, PayPal thwart DDoS attacks

Dwolla P2P goes national

Chip and PIN versus mag stripe debated

Discover's Zip cards ready for prime time

Trade Association News

Selling Prepaid

Prepaid in brief

Has gift card industry reached turning point?

GAO on why prepaid needs regulation


Checks give way to debit cards

Patti Murphy
The Takoma Group

Keys to driving merchant retention

Jeffrey Shavitz
Charge Card Systems Inc.


Street SmartsSM:
Are you awake to mobile payments?

Ken Musante
Eureka Payments LLC

Paperless merchant acquiring: A legal perspective

Adam Atlas
Attorney at Law

Experts weigh in on social media marketing - Part I

Bill Pirtle
MPCT Publishing Co.

E-commerce fraud: Identifying and reducing risk

Nicholas Cucci
Network Merchants Inc.

Company Profile

CheckAlt Payment Solutions

New Products

Virtual testing for ATM and POS networks

QuickStart System
Lexcel Solutions Inc.


It's a fine life, isn't it?



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

December 27, 2010  •  Issue 10:12:02

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Chip and PIN versus mag stripe debated

In a TowerGroup webinar that dealt with the state of the Payment Card Industry Data Security Standard, the question of whether chip and PIN technology will ever supplant magnetic stripe technology in the United States was addressed. Brian Riley, Senior Research Director, Bank Cards, at TowerGroup, concluded the move may be cost prohibitive and ineffective given the changing payments landscape.

In Putting the "You" into PCI: 2010 Card Industry Update, Riley said chip and PIN, which underpins the Europay/MasterCard/Visa (EMV) security standard, is often mentioned as a possible replacement for the mag stripe technology that prevails in the United States. Riley acknowledged that, in comparison to the mag stripe, chip and PIN delivers stronger security to payment cards, which makes the technology a greater deterrent to fraud.

"Another strength is that it's got an ISO standard, an international standard ... and that's certainly a deterrent for many fraud types," Riley said. "However, it does have its weaknesses. At the end of the day, EMV chips are a 25 year-old standard. And in the computer generation, that's a lifetime, or several lifetimes."

EMV drawbacks

Riley also noted that the EMV solution is more costly to produce than mag stripe cards. Additionally, if fraud costs the United States an estimated $6 billion annually and the replacement of the mag stripe with chip and PIN costs close to $5 billion, the conversion would not make sense financially, he said. Furthermore, the POS terminal infrastructure in the United States would have to undergo an expensive upgrade to accept chip and PIN cards, Riley pointed out. Also at issue is the compatibility of chip and PIN with the U.S. contactless card initiative.

"When you start looking at contactless cards, you start having very complicated plastic in the customer's hand," Riley said. "These will require multiple chips. ... One issue that we looked at when we looked at EMV cards versus mag stripe is the fact that the interoperability between EMV countries and non-EMV countries will be a challenge."

Another factor to consider is how EMV cards fit into a marketplace evolving toward online and mobile payments. Riley said chip and PIN "doesn't work particularly well in the online environment. And the online environment today is the fastest growing channel." The virtual ecosystem for contactless mobile payments, which reduces the need for plastic cards, also seems to weigh against the adoption of EMV card technology in the United States. Riley said a digital payment environment calls for digital security solutions, such as dynamic account numbers and one-time pass codes.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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