What is Chip and Pin and When Will it Come to the US

Author: BankFeeInsider.com     Friday, February 28, 2014 12:00 AM

In the wake of the most recent customer data hacking at Target and Neiman Marcus, the US Senate Judiciary Committee are currently holding federal level hearings regarding these security breaches. One of the most popular terms of discussion is the consideration of chip-and-PIN style credit and debit cards. This form of card is thought to be more secure because it uses a sophisticated chip embedded on the front of the card. In addition, users must use a four-digit PIN code in order to use their chip-and-PIN card as an added safeguard. In terms of security breaches, this type of card is less likely to be hacked compared to the magnetic cards currently used in the US, which are often stolen using small devices attached illegally in ATMs and other card readers.

European Style Banking Cards

If you have traveled to Europe in the past decade, you've heard of these banking cards in your guidebooks. In fact, most gas stations, highway toll booths and public transportation kiosks in Europe use this form of card exclusively. For Americans this can be quite a burden since our old school magnetic stripe card is obsolete in most of Europe. As a result, Americans who plan to travel overseas often want to update to the chip-and-PIN before they depart, more so out of convenience rather than financial security. Unfortunately, getting a chip-and-PIN card from a US bank is not as simple as asking for one.

Where to Get a Chip-and-PIN Card in the US

If you have a Barclaycard, Capital One, or Discover card you cannot get a chip-and-PIN card in the US as of February 2014. On the other hand, American Express, Bank of America, JPMorgan Chase, Citi, USAA, US Bank and Wells Fargo offer the chip-and-PIN card to certain types of banking customers, i.e. international customers or frequent travelers. Yet in instances where your bank may offer this type of card, you will need to make a request in order to receive a chip-and-PIN debit or credit card, also pending credit approval. Two of the largest credit card companies in the US, MasterCard and Visa, are set to adopt chip-and-PIN style cards by fall of 2015. Expect for all other major credit and debit card providers and associated banking institutions to follow suit.

Issues with the Card Change

The main issue of getting card companies on board to the chip-and-PIN format is cost. In order to change our card system here in the US it will cost companies across the board a great deal of money—billions in fact. That is because retailers and banks will need to install new card reading terminals and to manufacture new cards in order to enact this change. Additionally, banks and retailers will need to join forces to pull off this feat, which will certainly prove a challenge as these two industries are currently passing the buck in terms of liability and security for their customers.

 

Source: BFI