Pen Mightier Than PIN?

A French payments exec said JPMorgan Chase & Co. would be justified in telling clients it's safer to make debit card purchases with a signature than using a PIN.

Marite Ferrero, chief technology officer of CardSwitch Technology of France, challenges one of the assumptions in American Banker's April 21 story, "Counterintuitive Pitch for Higher-Fee Debit Category."

The story described a recent JPMorgan Chase letter sent to customers along with their debit cards, in which the banking company strongly suggested clients "always select 'credit' " when paying with their debit card.

"We know it's confusing," JPMorgan Chase wrote in a box on the mailing that was highlighted as being "important."

"It's not a credit card, so the money still comes out of your checking account. But by choosing 'credit,' you won't have to enter your PIN in public."

Our story questioned JPMorgan Chase's implication to customers that signature debit is safer than PIN debit, and quoted several analysts who said the opposite was true.

But Ferrero said those observers have it wrong.

"Since this has been my work since 2000, I can assure any reader here that in this case, the 'pen' is indeed mightier than the PIN code," Ferrero wrote in a letter to the editor submitted via our website.

"Fraudsters will skim the card's mag stripe specially if they can capture the PIN code to go with it," the executive wrote. "They then clone the mag stripe and use the captured PIN code to do non-face-to-face transactions such as ATM withdrawals.

"Fraudsters will less likely skim a card's mag stripe if there is no PIN code. There's hardly any payback in skimming and cloning your card if they can't capture your PIN code."

The story highlighted the fact that JPMorgan Chase stands to make more money when customers take its advice and sign for debit card purchases rather than punch in their PINs. But that's no skin off the bank customer's nose, Ferrero said.

"Yes it's true, issuing banks earn more interchange fees when you sign your cards. But you don't actually pay this interchange fee. The merchant or the card acceptor pays it."

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