Why are Americans dragging their heels on Chip & Pin?

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Starting in October, US merchants that have not made the switch to EMV will be personally held responsible for any fraudulent card payments that they process. But why are they still clinging to the old swipe-and-sign setup?

I’d say it’ll be another 5-7 years until we see 85% of transactions that are ‘chip on chip’, that is a Chip and PIN card on a chip-enabled terminal,” says Gartner Vice-President Avivah Litan.

In an interview with TechTarget, Litan explained that, despite the shift in liability that will take place in October, banks and merchants alike are still resisting change. America might be switching to EMV, and embracing the extra security that this harder-to-counterfeit technology brings, but that’s as far as it seems prepared to go.

Objections from the financial sector are baffling in light of US Federal Reserve figures, which estimate that authentication by PIN reduces fraud by 700% compared to signature verification. Rather than genuinely improving security, the financial sector seems more interested in passing the buck when things go wrong.

Bizarrely, the primary concern from the banking sector seems to be that customers won’t be able to remember their four digit PIN. Similar fears had been raised in Canada, but proved to be unfounded. Considering that most people in the UK, Europe, Australians and a number of other chip-and-pin-embracing nations seem to manage just fine, the issue seems vastly overblown – especially in light of the potential benefits.

But, as Litan says: “Until we get to that point, merchants still have to secure their systems the way they do today. It’ll still be mag-stripes being processed, merchants still have to accept those cards, and a lot of criminals will benefit from it. So nothing’s really changing in the short term.”

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