SAN FRANCISCO – Visa Inc.’s attempt to phase out the old, static PIN in favor of dynamic authentication is facing resistance – in particular because many are not convinced the PIN is past its prime.
American Banker, an affiliate of Credit Union Journal, reported that Visa is laying the groundwork for U.S. issuers and merchants to upgrade to the EMV Integrated Circuit Card Specifications used in other countries. But in a departure from nearly every other global market that has switched to EMV cards, which are commonly called chip-and-PIN for their most prominent security feature, Visa’s plan excludes PINs.
Visa recently outlined a series of incentives and deadlines to urge U.S. merchants to accept chip-card payments. The other card networks have not signaled plans to follow Visa’s lead, although they eventually did when Visa set similar deadlines in most other countries.
The card network’s chances of success “will depend on whether Visa has the market power to effect this widespread market change to chip transactions in the U.S., despite the fact that many players, from issuers to terminal manufacturers, have made a big investment in PIN-debit technology,” Mike Kutsch, a manager with the consulting firm Carlisle & Gallagher in Charlotte, N.C., told American Banker.
Visa has set Oct. 1, 2015, as the date when liability will shift from issuers to merchant acquirers if fraud occurs in a transaction that could have been prevented with a chip-enabled payment terminal.
EMV chips combat card counterfeiting by sending a dynamic code with each transaction. If that code is stolen, it cannot be used again to authorize a second transaction.
Dynamic authentication also does not block fraud on individual lost or stolen cards, Julie Conroy McNelley, a senior risk and fraud analyst at Aite Group LLC, told American Banker.
“The challenge to eliminating PINs on chip cards, and why PINs are still useful, is the fact that if someone takes your wallet and gets your signature-only chip card, a criminal can use that card until the cardholder notices it’s gone and calls it in,” McNelley said.
