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These days, it may seem a lot of companies go court on consumer safety. The trend began with the pursuit of the goal of last year following the breach 2013, then we saw Apple take on the FBI about the iPhone encryption earlier this year and now we have Walmart challenge on Visa smart transactions and signing using the relatively new EMV (or chip) technology. In this case, Walmart says that Visa requires the company to expose customers to security risks by requiring signatures for transactions with EMV card, instead of allowing customers to also pay with chip and PIN. To help you get a better understanding of how this trial involving smart cards you can have an impact, if we detail the concerns of Walmart are legitimate and all you need to know.
How does EMV
In order to understand that Walmart claims, it is important to take a brief moment to go on the way EMV cards work. As you know, every time an EMV card is swiped, it uses a chip to generate a unique transaction code, although skimmed, can not be used again. As with all transactions magnetic stripe cards, EMV cards based on a form of verification before purchasing - a signature or PIN. Although the vast majority of EMV cards in Europe allows users to verify their identity with a PIN code, adapting the PIN EMV compatible in the US has been rather slow, with many card issuers providing only signature only maps. For years, security experts have said chip and-PIN cards are a safer way to pay, but Walmart is the first company to sue a credit card provider in respect of this issue.
Why Walmart doing this
Walmart has tried to eliminate the chip-and-signing transactions for debit cards in the name of consumer protection ?; However, the existing contract with Visa merchants require them to offer both PIN and signature on the check options. To break free of this obligation so that it only allows PIN transactions, Walmart Visa takes to the court.
At first it may seem Walmart is not a fan of EMV - especially as the transition to this new technology has given much trouble merchants - but this is not the case, as the company was actually one of the first major retailers to push for the full EMV adoption. In addition, support for the technology as far back as 2010. But while supporting EMV, the retailer has always been vocally critical of transactions based on chip and signature. Given the consistent position of Walmart, this process may seem an instance of the society fighting for its ideals and two customers, but it is actually a bit more complicated.
allegations are true Walmart?
This is where it becomes cloudy, like Walmart's position is based on a half-truth. Chip-and-PIN transactions are safer in specific cases, such as theft of the physical card, since someone will probably not be able to guess the PIN; However, declarations of Walmart on the nature of his trial and his claims are ambiguous leave the public to fill important details about the wider aspects of the case.
First, the Visa rules do not prohibit the PIN verification - if an EMV card is PIN-compatible, a consumer can opt to use their PIN. Visa makes Walmart provide signatures as an alternative, not a replacement PIN verification, as Visa said that many customers prefer transactions with chip and signature with both debit and credit cards. Walmart's just verifying PIN would reduce fraud, but only one type -. Store purchases with stolen Visa debit cards, primarily as everybody can make a trade chip and signature
Second, Walmart may have an ulterior motive with this case - by reducing transaction costs. Chip-transactions and signature travel through company credit card systems, while transactions with chip and PIN do not do, which cost a merchant more and transaction fees. The bottom line is that it is more expensive for Walmart to offer smart transactions and signing, which is nothing new, that the current fight with Visa Walmart is just one of the many trials ( and dozens of major retailers) had with the credit card companies since the 1990s ultimately, it seems that it all boils down to control transaction costs, and Walmart tried several tactics to gain the upper hand such as the use of antitrust litigation against companies such as Visa to create its own payment systems. With a win in this trial, Walmart is held in place its current application of mobile payment, Walmart Pay, in a more favorable position, while reducing the costs it pays to Visa.
Finally, while the chip and signature cards may be less safe in cases of physical card theft, any decision in favor of Walmart will not add a substantial amount of consumer protection for majority of EMV cardholders. This is partly because of the fraud more debit cards does not occur with physically stolen cards, as is usually done online. But the main reason Walmart movement will not change things is that there are still many non-Visa and non-PIN debit cards without compatibility - some consumers are not even EMV cards. As such, it is very likely that other retailers and credit card companies will not be affected by the outcome of this case. So while victims Visa debit card theft benefit if (and only if) their stolen card is used in store at Walmart, it is not obvious someone else. It should be noted that this trial is not necessarily a bad thing, as a wider adoption of PIN-able EMV is a major problem that companies like Visa must address soon. The problem, however, is that the scope of the complaint to Walmart is more limited than the company let on, which means that the case will probably not change much outside the Walmart bottom line.
What should you do to protect yourself?
Although EMV cards will protect you in many cases of fraud, fraudsters have continued to find ways to use EMV cards, and Europe has even seen exploits with chip and cards - PINE. The takeaway from all this is that regardless of how secure payment technology has become, consumers must also take steps to protect themselves by monitoring their bank statements and credit card regularly and report any fraudulent transaction soon you spot them. In addition, it is wise for consumers to opt for more flow credit whenever possible because it offers greater protection against fraud.
keep our personal finance blog for more information about chip technology and get advice on how to protect yourself against payment fraud.