Wal-Mart sues Visa over failure to mandate Chip and PIN

Wal-Mart sues Visa over failure to mandate Chip and PIN

Visa's insistence that chip card holders in the US can continue to pay with a signature at the checkout has landed it in hot water with Wal-Mart, which is suing the card scheme over its failure to mandate the use of Chip and PIN payments.

The big box US retailer says that Visa's position on the continued use of signatures at the checkout creates an "unacceptable risk" to customers.

"PIN is the only truly secure form of cardholder verification in the marketplace today, and it offers superior security to our customers," Wal-Mart said in a statement. "And Visa has acknowledged in many other countries that Chip and PIN offer greater security. 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."

At the heart of the issue is Visa's continued control of the transaction during a signature checkout. PIN transactions, in contrast, can be routed through cheaper third party networks.

Visa and MasterCard EMV rules around consumer choice have led some merchants and point of sale (POS) terminal providers to implement POS processes that force consumers to select a debit AID (account identifier) for routing when presenting a chip-enabled debit card for payment at the POS, effectively overriding merchant routing preferences.

In a statement, the DebitNetworkAlliance - representing the interests of alternative debit networks - says: "As merchants upgrade their terminals to be EMV compliant, Visa and MasterCard have emphasised these new 'consumer choice' rules, which require merchants to comply with a consumer’s choice of AID, effectively forcing individual debit transactions to be routed over the Visa or MasterCard networks as opposed to other networks available to the merchant."

Wal-Mart has filed suit with the New York State Supreme Court, seeking a jury trial on the issue.

Comments: (2)

Hitesh Thakkar
Hitesh Thakkar - SME - Fintech startups (APAC and Africa) - India 11 May, 2016, 18:12Be the first to give this comment the thumbs up 0 likes

This is very old debate started between VISA and MasterCard since 90s. Nice confusion created in the name of taking dollars from coffer of merchants and banks.

Gerard Hergenroeder
Gerard Hergenroeder - Payments Shark - Millersvile 17 May, 2016, 19:58Be the first to give this comment the thumbs up 0 likes

Walmart makes a good point. Chip and PIN yields the lowest loss rates. So why not just do it? It is just good overall for the industry! Consumers would get used to using PIN in short order.