Signature-Only Chip Cards? Major Merchants Aren't Signing On

BALTIMORE — Two large merchants at Nacha's Payments 2012 conference expressed decidedly negative views on the card networks' approach to the EMV secure chip-card standard in the U.S.

During a panel discussion, representatives from hardware retailer Home Depot (HD) and movie theater operator AMC Entertainment cited among their top beefs a lack of consensus on whether the U.S. will embrace a chip-and-PIN approach or merely require a signature for chip card transactions.

Visa (NYSE:V) and MasterCard (MA) do not require a PIN, and many U.S. issuers have already released signature-only EMV cards. In other countries, a PIN is so common that EMV cards are frequently called chip-and-PIN cards.

Visa last year announced a series of incentives, including a 2015 liability shift for fraudulent transactions for merchants that do not adopt EMV. MasterCard in January released its own EMV guidelines.

"A liability shift is nothing more than preserving existing liability," said Malcolm Nunes, Home Depot's senior manager for financial services.

"Right now, there is a stick, but no carrot," he said. "There is almost an argument [to be made] that I should wait until after the liability shift to see what my losses are. Then I will have a business case."

Both large merchants said they are staunchly against broad adoption of EMV that does not require PINs.

"PIN is obviously the means of true authentication," Nunes said.

Terry Crawford, AMC's senior vice president and treasurer, expressed skepticism that the U.S. could be EMV-ready by 2015 even if issuers and merchants agree to push ahead with broad EMV adoption.

"I'm not certain the timelines laid out so far are hard and fast … if you look at how things have played out [in other countries] over the years, the timelines will have to be moved," Crawford said. "We'll wait and see."

Read the full story at PaymentsSource.

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