Fed data stokes signature vs. PIN debate

As we all know, there is an ongoing industry debate centered on whether chip-and-PIN transactions are more secure than chip card transactions that use only a cardholder's signature. A recent survey by the Federal Reserve Board affirms that PIN wins over signature.

 Those who favor signature say it is faster and easier to deploy than PIN. However, signature-only transactions are tied to higher fraud losses. In fact, according to the survey, signature transactions accounted for $1.13 billion of fraud losses in the U.S. in 2011, while PIN accounted for $204 million.

Despite these statistics, a number of U.S. issuers plan to offer signature-only EMV cards. The two major networks are on opposite sides of the debate. Visa contends that chip-and-signature allows merchants to adopt EMV technology more quickly, and eliminates the cost of PIN readers. Conversely, MasterCard points out chip-and-PIN's impressive fraud-prevention record.

As the nation’s financial institutions begin to migrate their own portfolios from mag-stripe to chip cards, the signature/PIN decision is a very big one. While each issuer will have to evaluate the costs and benefits of the various formats, PIN continues to reign supreme in the eyes of many industry experts — Shazam included.