WASHINGTON — A panel of executives from regulators, card issuers and retailers roundly endorsed using cards with embedded chips as a primary means of combating fraud and cutting fraud protection costs.
The panel told attendees Wednesday at Visa's Global Security Summit that other nations have uniformly found so called chip-and-PIN technology a marked improvement over card technology that relies on strips of magnetic tape to carry authentication data.
Stephen Fedor, senior director of Loss Prevention and Investigations for the Canadian Imperial Bank of Commerce, recounted how his bank, which issues both chip-and-PIN and magnetic stripe cards, had begun to have magnetic card holders traveling in Europe report not being able to make purchases at all in growing numbers of European retailers.
But while the panel agreed that chip cards are better, there was less agreement on what the best way forward might be to bring the cards to more complete use in the U.S. Richard Oliver, senior vice president with the Federal Reserve Bank of Atlanta, told the meeting that he doubted whether the Federal Reserve would dictate the adoption of chip-and-PIN.
They might, he said, “But I think it would be better if the private sector did it, and if they did do it I would hope they would take a very cautious approach.”
Mike Cook, vice president and assistant treasurer for Wal-Mart, surprised most of the meeting participants with the news that a majority of his company’s stores were already capable of accepting cards authenticated with chips and that the retail chain was already accepting government benefit cards with chips in three states.
Cook told the panel that he expected the shift to chip-and-PIN would come when card issuers began to see a competitive advantage in issuing cards with chips in them over cards with magnetic stripes.