Retailers Fight Back to Push for Chip-And-PIN Transactions

Retailers who have changed over to the chip-and-PIN terminals are fighting back against the card issuers and filing lawsuits to make transactions more secure.

Home Depot, the Atlanta-based home improvement retailer, filed a federal lawsuit this month accusing Visa and MasterCard, two credit card issuers, of hindering the retailer's efforts to boost the security of the new chip cards. In their lawsuit, the company claims that the card issuers are not giving retailers the option to offer more secure transactions where consumers have to use their PIN, a four digit code instead of a basic signature. Allowing the use of a PIN increases security and would lower the transaction fee being charged to the retailers by the issuers.

The chip-enabled, or EMV, cards contain a computer chip which has the ability to generate a unique code for each purchase. These cards are also more difficult to counterfeit.

In the lawsuit, Home Depot alleges that "while chip-and-PIN authentication is proven to be more secure, it is less profitable for Visa, MasterCard, and their member banks and it provides a greater threat to their market dominance."

These lawsuits have occurred, because retailers are "incredibly frustrated because they're spending a ton of money and still not getting the safest, best solution," said Matt Schulz, senior industry analyst at CreditCards.com, an Austin, Texas-based credit card comparison website. The likelihood that more retailers will file lawsuits is high.

Utilizing chip-and-signature means retailers are still vulnerable, because they are not receiving the most secure form of protection from hackers for transactions.

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