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The Green SheetGreen Sheet

The Green Sheet Online Edition

September 12, 2016 • Issue 16:09:01

Readers Speak

Signature versus PIN a hot topic

Staff Writer Dale S. Laszig received the following feedback on "Chip and PIN debate roils retail, payments sectors," published in The Green Sheet Aug. 22, 2016, issue 16:08:02.

The Home Depot, Walmart, Kroger and others understandably oppose card associations' contract language mandating a signature debit option for consumers at checkout. Signature debit transactions ride the credit "rails" with higher interchange rates than PIN transactions that are routed on less costly debit networks, and PIN authentication/verification is inherently more secure. In fact, the latter is, in large part, the very reason for lower interchange rates on debit transactions in the first place.

Retailers of all sizes, as well as issuers, resist chip-and-PIN due to additional costs for implementation and further changes to consumers' experiences at checkout, when weighed against too little forecast reduction in fraud.

If we're truly interested in eliminating fraud resulting from lost, stolen and counterfeit cards in the United States, we'd move to chip-and-PIN as quickly as possible, while fully embracing tokenization and phasing out the mag stripe altogether.

Interestingly, mobile payments platforms such as Android Pay, Apple Pay and Samsung Pay, currently offer these enhanced security features, if in slightly different form. Users are authenticated via PIN or biometric security, transactions are tokenized, and there's no mag stripe to compromise. Along with recently introduced mobile payment schemes from Walmart and CVS, uniformly offering consumers mobile payment options at checkout would go a long way toward reducing card fraud today.

John Coloe, Mobile Payments Consulting Strategist

Great points, John. There's no doubt chip-and-PIN is a more secure payment method than chip-and-signature for the very reasons you and numerous retailers have mentioned.

Aite's recent report (featured in the article cited above) advises retailers to weigh chip-and-PIN implementation costs against purported benefits, which is sound advice for small merchants who have never used PIN pads. However, customer-facing PIN pads have long been a staple of enterprise-scale retailers; it makes sense they'd want to leverage existing infrastructure after being early EMV adopters.

Dale S. Laszig, The Green Sheet Inc.

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