It’s been nearly a month since the highly anticipated October 1 EMV deadline, whereby merchants across the country became responsible for upgrading their payment terminals to accept new chip-equipped credit and debit cards. If not, the liability will fall on them should a fraudulent transaction occur – an issue that has become all too common. In the wake of that deadline, a cohort of stakeholders—including the Federal Bureau Investigation—have continuously weighed in on this security overhaul and whether or not chip-cards provide enough of a safeguard for consumers at the register.

This week, Capitol Hill will once again weigh in at a second House Small Business Committee hearing on the EMV transition. The first hearing, held shortly after the October 1 deadline, heard from a variety of financial transactions providers discussed nationwide implementation and addressed the ongoing debate over chip-only cards versus the globally-accepted chip and PIN cards.


Prior to October 1, banks were usually responsible for repaying consumers when their credit cards fraud occurs. Now the burden has shifted, and if fraud occurs, and merchants will be responsible for reimbursing those accounts if they had the lesser technology.

Chip-cards feature an embedded microchip that stores financial data, replacing the tried-but-not-always-true magnetic stripe. Instead of swiping our cards, we’ll dip them into the payment terminal. Unfortunately for consumers and merchants alike, chip-cards and upgraded hardware may not be enough to thwart thieves from compromising their financial information. While chip-cards solve the problem of where the financial data is located (within the microchip as opposed to the magnetic stripe), these latest cards continue to use a signature as a way to finalize a transaction.

The chip and PIN system, on the other hand, has been used around the world for years; and in some cases for over a decade. Chip and PIN technology uses an advanced two-factor authentication system. Along with the microchip, each card is outfitted with a unique four-digit PIN (Personal Identification Number) that consumers are required to enter upon making an in-store transaction. It is undeniably more difficult for a thief to figure out a unique code than it would be to forge a simple signature.

That added layer of security has led to dramatic fraud reduction throughout Europe, Canada and Australia. When the United Kingdom adopted the technology, in-store fraud dropped a whopping 60 percent.

Yet despite the overwhelming evidence of chip and PIN’s success, Visa, MasterCard and other financial institutions have been issuing chip-only cards, arguing that consumers would have trouble remembering an additional password. In actuality, big banks are cutting corners to cut costs, forgoing the added PIN feature to reduce the amount they would have to invest in new cards. According to the American Bankers Association, “the chip and sign devices…are less costly than if we moved to a chip and PIN system.”

But less costly for who? The banks, of course. The multibillion dollar financial institutions are cutting corners to save their own dollars – and this doesn’t serve the best interest of consumers.

The implementation of chip and PIN has already proven to be an exponentially stronger safeguard from common credit card abuses. With a reduction in fraud, comes a reduction in related costs in the payment ecosystem. Adopting this technology is a worthwhile investment. In a recent column published in The Hill, former FBI Counterintelligence Operative Eric O’Neill writes, “credit card fraud costs the economy billions of dollars every year [and] consumers face potentially devastating legal and administrative challenges in recovering from fraudulent activities and stolen identities.”

And while merchants race to upgrade their terminals to the tune of $300 a unit according to some estimates, recent reports indicate that less than one-fifth, or 18 percent, of VISA’s 720 million debit and credit cards contain the embedded chip.

Given the lack of progress on transitioning to chip-cards thus far, financial institutions should consider the success of chip and PIN around the world and upgrade their cards with this two-prong system. Consumers deserve the best payment security system available – and that system is chip and PIN.

Without it, we all may end up paying the price.

Berlyn is president of consumer policy solutions and director of the Consumer Awareness Project. She is also the leader of