Would EMV Chip Based Cards be More Secure with PIN?
According to the National Retail Federation (NRF), EMV (Europay MasterCard Visa) or the new chip-and-signature credit cards aren’t as effective without consumers using a personal identification number (PIN). Some argue that without a PIN, these chip based EMV cards cannot stop data breaches. They add that without PIN, the significant security benefit to businesses and consumers is lost. This makes them useless for small businesses, which are being pressured to install the equipment and bear additional expenses.
Featuring a computer microchip, EMV cards being issued by U.S. banks could be vulnerable to data breach, since they lack a secure PIN. The microchip will replace the easily copied magnetic stripe for storing data. While chips make counterfeiting cards a lot more difficult, they cannot protect stolen cards or lost cards. However, EMV would be more secure with PIN and would stop forged signatures too, helping prevent both types of fraud.
The recent arguments on chip based cards have surfaced in a report issued to the House Small Business Committee. Merchants were given a deadline to either install chip-card readers or face strict penalty for using a chip-and-signature credit card in a non-chip reader. As a result, they could invite fraud liabilities.
PIN and Fraud
PIN has been used for ATM transactions since 1967. It’s ease of use and security value has so far been unparalleled. It does have its weaknesses, but it’s strengths far outweigh them.
About 50 % of total card fraud in the U.S. occurs in online transactions where a PIN is not needed. About 30 % of in-store fraud happens with counterfeit cards where PIN is again, not used.
A 2012 report from the Federal Reserve Bank of Atlanta reported that PIN debit fraud rates have increased more than 300 % since 2004. When consumers’ PINs are compromised, fraudsters quickly drain their bank accounts.
Recently in California and Colorado, Safeway customers using certain terminals in Safeway stores had their PINs stolen. They had used their debit cards with PIN at terminals that had been tampered with. Fraudsters installed devices that captured and stored customers PINs and then promptly emptied their bank accounts with the stolen PINs.
So, it’s safe to say that it could go either way with or without PIN for chip based cards. There is still a chance of card fraud, but I do believe that Chip and PIN would be more secure than Chip and Signature. After all, most of the world outside the U.S. is using Chip and PIN.
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