Walmart Sues Visa over ‘Chip-and-Signature’ Requirement for Debit
May 12, 2016
The most recent legal battle between retailers and payment card brands commenced this week when Walmart filed suit in a New York state court challenging Visa’s requirement that new chip-enabled debit cards be verified with the customer’s signature rather than a PIN. Despite the shift in liability last October for fraudulent in-store purchases from issuers to merchants if they have not updated their POS systems to accept chip cards, various estimates still put EMV adoption by merchants at less than 40 percent. From a card-not-present perspective, the lawsuit is only the most recent hurdle that could delay a possible spike in CNP fraud that other countries experienced when counterfeit fraud at the POS was rendered more difficult because of EMV.
Walmart wants to be able to require customers making purchases with chip-enabled debit cards to verify their identity with the more secure method of entering a PIN, which they already must do when using the card at an ATM, for example. The company said Visa’s signature authentication requirement for debit is “inconsistent with federal law” and “creates an unacceptable risk to customers.” Visa has declined to comment publicly on the matter. Retailer groups have long lobbied against the “chip-and-signature” implementation of EMV for debit and credit card transactions as not secure enough while the card brands and issuers have said requiring PINs at the point of sale will be too confusing for customers.
EMV concerns in the card-not-present world are very different from those in the card-present space. This year’s CNP Expo will focus on EMV in several of our more than 40 educational sessions, including one that will look beyond CNP fraud to other unintended consequences like higher declines for subscription merchants. Take a look at our entire agenda and register for the CNP Expo today.