Why Walmart Is Suing Visa and What It Means for Your Credit Cards
Last year, credit card issuers finally introduced chip credit cards to the US. It was a painless process for the most part, but Walmart is now suing Visa over the technology, claiming it is unsafe for customers.
Why Walmart Sues
We told you about this new chip or EMV technology (“Europay, MasterCard and Visa”) . It should be more secure, and while it will include PINs in the future, for now, credit and debit cards with a chip will work with signature.
Last year, Walmart tried to force debit card customers to pay the old way: with their PINs. Visa came back and demanded that they allow signatures for these cards using the new chip technology. Walmart spokesman Randy Hargrove explained the issue:
A PIN is the only truly secure form of cardholder verification on the market today and provides superior security for our customers. Visa has recognized in many other countries that the chip and pin is more secure. However, Visa has required us to allow fraudulent signature verification for debit transactions at our U.S. stores because Visa can make more money from processing these transactions.
However, Walmart’s outrage is likely less about security than about money. It is cheaper for Walmart to verify with a PIN than to sign. Signature verification costs about five cents more per transaction, according to the Wall Street Journal . In other words, the new technology encourages customers to use their bank cards as credit cards rather than debit cards, which is more expensive for Walmart.
It’s easy to see why Walmart is upset – this new technology is costing them money, and credit card companies still haven’t released a cheaper, safer PIN technology. However, their assumption that customer security is at stake is misleading.
Don’t worry: your new cards are no more dangerous than the old ones.
Walmart said in a statement that Visa compromises customer security by allowing signatures instead of PINs for debit card transactions. It sucks that we’re still waiting for full-blown chip and PIN technology to be even more secure, but new credit cards aren’t any more dangerous than your old ones.
It is true that debit cards have lost the security feature of entering the PIN, but they have received a new security feature: the one-time code that comes with the chip card. Here’s how one USA Today expert put it :
“Chip cards, whether a signature, PIN or biometrics are required … are equally secure because they fight counterfeit fraud and create unique value for every transaction,” says Carolyn Balfani, Senior Vice President … Delivery of goods for MasterCard in the USA.
Because of this particular code, hacking or copying the card will get you nowhere. A PIN is more important than a signature when a card is lost or stolen.
The most misleading conclusion is that you have no choice. You do! As USA Today explains, “Walmart automatically prompts customers to enter a PIN when they use a chip debit card, but customers can cancel it and enter a signature instead.” Walmart seems to be hinting that Visa is forcing customers to sign up, but they are simply demanding that Walmart allow customers to use their new debit cards with a signature chip.
In general, if you want to enter your PIN, you can still enter your PIN. If you want to use your debit card’s new chip technology, you can do that too.