Walmart is suing Visa over how they handle chip card transactions and verifications, citing that using signatures in lieu of PINs is both dangerous and expensive.
Walmart says allowing customers to sign for their purchases when using debit cards allows for fraud, even with the new chip technology. The retail giant also has data to back up their claim: their numbers show that 91% of fraudulent transactions are done with signatures. Because debit cards always pose a higher risk than credit cards – and 70 percent of Walmart customers purchase items using debit – the retailer wants stronger security for its shoppers.
Yet safety isn’t the only issue Walmart has with Visa’s rules. The credit card company stands to lose money – according to Walmart – if they switch over to a PIN verification process because then Walmart can use a cheaper competitor to route the payments. As of now, Visa’s network handles all signature payments. While customers DO have the option use a PIN, many override it to save time. For debit card transactions (not credit), Walmart wants this option gone completely.
While the chip was introduced as a way to cut down on fraud, it’s been successful because it works in tandem with the PIN. The United States is far behind many European countries with implementing the chip and the PIN, and we’re having more problems with fraud and identity theft as a result.
Walmart spokesperson Randy Hargrove said the PIN is the only secure form of verification out there, and he has accused Visa of purposely ignoring the challenges Walmart faces because they care more about profit than protection..
“Visa has acknowledged in many other countries that chip-and-pin offer greater security,” Hargrove stated. “Visa nevertheless has demanded that we allow fraud-prone signature verification for debit transactions in our U.S. stores because Visa stands to make more money processing those transactions.”
Visa has declined to comment.