A few weeks back I was enjoying a meal at the Barclay Prime Steakhouse in Philadelphia, PA when someone asked me to explain what chip-and-PIN really meant to the everyday American consumer. I paused for a few seconds contemplating how two describe a solution that US banks weren’t really implementing. While EU banks have adopted chip-and-PIN, US banks are only adopting chip-and-sign. While chip based credit cards are more difficult and expensive for counterfeiters to physically copy and clone, chip-and-PIN does little to deter online fraud which is becoming a bigger and bigger problem on both sides of the Atlantic.
Why is it so slow?
If you’ve used a Chip-and-PIN card you’ve probably noticed that it takes about 7-11 seconds for the authorization to occur. A far cry from the 3-4 seconds it generally takes when swiping an older magnetic card. I’m not sure if this is a function of the crypto, the immaturity of payment systems or the actual retail POS systems themselves. I know that in my organization there’s been quite a bit of discussion around what this will do to customer check out times, I’m wondering if there will be a marked increase in ADHD medication sales coinciding with the rollout of chip-and-PIN. I know that Target and Home Depot, both victims of very public data breaches, are now using chip-and-signature in their retail stores.
What’s NFC?
Near field communication is a low power, short range radio signal that can be used between mobile devices or between a smartphone and a credit card payment terminal. Google was the first on the scene with Google Wallet in 2012 but adoption has languished partially because all the vendors want a piece of the pie. Fast forward to present day and you have Apple Pay, Samsung Pay and Android Pay. Android Pay is just a more refined version of Google Wallet although there are quite a few complaints about Android Pay not working well on the net. What’s the allure of these mobile applications? You can store your credit cards and loyalty cards within the mobile app and then just tap and go to make your purchase. No need to carry all those credit cards and loyalty cards in your wallet or purse anymore.
I have a Motorola Moto X which supports NFC but I haven’t really tried it yet with any retailers.
Are you using either Apple Pay, Samsung Pay or Android Pay?
Cheers!
Image Credit: Alex Fiore
References;
http://krebsonsecurity.com/2014/10/chip-pin-vs-chip-signature/
Hi Michael,
In the UK we do indeed use Chip&Pin and have done so for the last 15 years and has cut fraud dramatically as they are very difficult to clone. The transaction usually takes 3-4 seconds in my experience. We have also recently started using ‘Contactless’ (NFC) debit cards, which allow you to spend currently up to £30 by just touching your debit card onto the card reader and is almost instant. Great for traveling around London on the underground and popping to the corner shop :)
CheerZ
Thanks for the comment Flintstone…
The delay is probably just some POS integration issue, however, it is very noticeable here in the US right now. I’m going to try and setup Google Pay (Google Wallet) and/or Samsung Pay to see how well NFC payments work.
Cheers!