Speaking last week at the Electronic Transactions Association's annual gathering in Las Vegas, Discover Financial Services Chairman and CEO David Nelms dialed up the pressure to make EMV credit cards more secure through the use of a personal identification number (PIN), according to news and analysts company Payments Source.
Technically Discover supports the chip-and-signature for its credit cards at the moment, but Nelms said that with some cards requiring PINs and others just signatures, the environment is becoming more confusing for consumers, and that as the U.S. continues to transition to the more secure EMV cards, the switch should favor the inclusion of a PIN to further bolster consumer protections.
Debit cards already require PIN numbers, and that discrepancy doesn’t make sense, Nelms added.
As the U.S. has transitioned to EMV cards, which are more widely used worldwide than magnetic stripe cards, most banks and credit card issuers have eschewed the use of a PIN, which they’ve maintained is more cumbersome for consumers.
But in an era when people of all ages input four-digit codes to unlock their own cell phones and to access their money at an ATM—and with fraud so rampant—retailers say that makes little sense.
Mark Horwedel, CEO of Merchant Advisory Group, whose members are large retailers, on a conference call with reporters last year expressed frustration about the reluctance to include PINs.
“We’ve shouted in the dark for a long time,” Horwedel said. “This is basically a facade—this claim [by banks] that the reluctance is consideration for the consumer. We’ve all used PIN numbers at ATMs for a long time. Let’s go to something that’s better.”
Now a top executive from one of those companies is joining the call, using many of the same arguments. "I think we may be missing an opportunity to go to the higher level of security with EMV, which is how chip cards are handled in the rest of the world, and what merchants in other countries expect when they see a U.S.-issued EMV card," Discover's Nelms said, according to Payments Source.
Nelms also noted, as others have, that the transition to EMV could accelerate adoption of mobile payments, but said that mobile will likely be an additional way to pay, more than a replacement.
"I think the smartphone will become a dominant access device for payments, but there will be a proliferation of devices," he said. ”If you think about it, we've never really phased out any payments device yet. We just keeping adding things on and improving them."
The Retail Industry Leaders Association, which has been advocating the use of PINs for months, applauded Nelms’ position, highlighting his remarks in an email to reporters.
“Retailers appreciate the candid assessment from a leading card issuer that the financial services industry has missed an opportunity to provide a higher level of security for U.S. consumers,” RILA VP of government affairs Austen Jensen said in a statement emailed to Retail Dive. “Banks and other card issuers should follow Discover’s lead and make a commitment to providing American consumers with the same level of security that consumers in Canada and Europe now enjoy.”