We wish to thank Justin Pike, founder of MYPINPAD, for sharing his views on PIN authentication's important role. The following is excerpted from his note:
"When PIN authentication was introduced in the UK in 2004, losses due to the fraudulent use of credit and debit cards fell by 13 percent in the first year, use of cloned or skimmed cards dropped by 25 percent, and use of lost or stolen cards fell by 22 percent. This trajectory has continued.
"The combination of PIN's vast security and simple customer experience—which merely require consumers to enter a four-digit number into a terminal at the POS rather than relying on signatures or biometrics (that can be forged)—quickly led to its widespread globally. But some countries, such as the United States, still rely on signatures with card payments and continue to report high levels of payment fraud. For example, in late 2019, 77 percent of U.S. merchants reported they had experienced some type of fraud, and that their efforts to manage security had impacted their businesses' bottom lines.
"PIN is widely accepted as a safe, secure way to pay, and PIN entry has become a habitual behavior in the UK and Europe. Accelerated by COVID-19, cash usage is down by half. With in-person shopping options limited and a need to avoid crowds, more people are shopping online. But with inexperienced people shopping digitally, online fraud has risen by 50 percent since January 2020—a preexisting challenge exacerbated by COVID.
"Contactless, is at the forefront of consumer protection because it enables payment without physically touching a terminal. However, contactless payments have traditionally been available only for small sums, with PIN mandated by the Strong Customer Authentication (SCA) requirement of the EU Revised Directive on Payment Services for larger transactions and every fifth contactless transaction.
"If we reflect on consumers who are new to ecommerce, and the needs of all consumers coupled with SCA requirements, the simplest, most secure way to transact online is the PIN."
Should the United States employ PIN authentication at the POS? Weigh in at email@example.com.
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