Few Banks Opting for PIN-Based, Chip-Reading Credit Card Transactions

The national switchover — or at least the slow-evolving start — toward “EMV” chip-based credit card payments started Oct. 1, as the U.S. is behind globally in eliminating the hack-vulnerable, magnetic-strip cards.

But at those businesses that have made the point-of-sale conversion to smart credit cards, consumers still have to sign their credit receipts. There is the better and even safer method: Entering 4-digit PIN instead of signing.
Most big credit card issuers don’t want to burden customers with memorizing yet another PIN, or are not willing or able to make that jump.
Some banks, however, have done so. One example is First Niagara, a regional bank in upstate New York which took over many of HSBC’s consumer branches when HSBC left he consumer banking market.
They only have about 250,000 credit card customers, which pales in comparison to the millions with cards issued by Chase, Bank of America or Capital One. But First Niagara is the largest bank requiring their credit card customers to use PINs instead of signatures for transactions.
A few smaller banks are using PINs, including First Premier, a bank that focuses on less creditworthy consumers and has some notoriously terrible, high-fee and high-rate cards.
Target also plans to require customers to use PINs once they complete re-issuing EMV cards for their store cards customers. But there is a catch: customers won’t be allowed to use the same PIN on both their credit and debit cards. That’s probably a good thing, security-wise. But it’s one more PIN for consumers to memorize.
Meanwhile, retailers are being urged to install chip-reading terminals that allow users to enter these PINs, few of the cards being sent to consumers at this come with PINs.
Glen LaFollette, office manager of Mink boutique on Southeast Portland’s Hawthorne Boulevard, told OregonLive.com that he spent $700 last summer to upgrade his point-of-sale system. But the new card reader they received won’t yet process chips on the new cards.
“We upgraded but now we’re waiting on them,” he said of Intuit, Mink’s merchant service provider (these providers help process payments). “If someone tried to use an EMV card right now, it wouldn’t go through.”
LaFollette said Intuit assures him it will assume any fraud liability until the card reader is fully operational.

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