It’s been more than 10 years since the introduction of a more secure credit card that incorporates a chip and requires a PIN or signature to authorize transactions. The chip and PIN cards have been used in Europe for years, while the U.S. credit card and retail industries have dragged their feet because of the high cost of making the switch. Who would have thought it would have taken so long to spread to the U.S., but it was just a matter of time with the vulnerability of magnetic strips by hackers so often in the news. Consumers are now demanding improved security.
With a slew of highly publicized, large scale credit card data breaches recently in the news, consumers are pointing their fingers at retailers, banks and card companies – not a good sign for future revenue. Changing the status quo is critical to maintaining consumer trust for an industry that has been under government scrutiny and consumer criticism for years.
Lack of Confidence in Retailers
Where to spend their money and what form of payment they should use are questions being asked by consumers as they search for ways to protect their personal information from hackers and vulnerable credit card systems and servers. A study based on a survey by Javelin Strategy & Research of fraud victims by the National Consumer League, a private, nonprofit advocacy group representing consumers on marketplace and workplace issues, found that consumers are blaming retailers and increasingly looking to do their business with new merchants based on their perception of credit card security. Six out of ten victims have lost trust in retailers to keep their data safe; a third of the victims surveyed felt ‘certain’ that the breach happened at a retail site.
A second survey by Vision Critical found that sixty percent of Americans are likely to use cash at retailers who have had breaches in the news. Twenty-eight percent of fraud victims in this study said they lost confidence in their financial institutions following their experiences.
Another point to consider is the concern for American travelers. Visitors to Europe have been frustrated for years by the stricter standards across the pond that make mag stripe credit cards obsolete and useless in some venues. Not only are chip and PIN cards safer, but they’re becoming more universally accepted around the world.
Chip & Pin OfferingS to Americans
Sam’s Club is the first major U.S. retailer to make the switch to the more secure technology and is now able to accept chip cards at all of their locations. The Sam’s Club cards will be PIN-enabled but will primarily verify users by signature. Customers must be Sam’s Club members to apply for the card, but it can be used anywhere that MasterCard is accepted.
Their parent company and the world’s largest retailer, Wal-Mart, is working to complete installation of chip-enabled terminals at most Wal-Mart locations. In the meantime, Target Corp. is rushing to make the transition and expects to be finished by early 2015.
While you can get a chip-enabled card today, it will be several years before they’ll be universally accepted. You’ll still be able to swipe and sign using these newer cards, so there’s really no downside if you want to embrace the new technology right away.