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PIN transactions — they're simply safer

June 2, 2014 by Terry Dooley — SVP & CIO, ITS, Inc

The National Retail Federation recently told the Senate Commerce Committee that it’s past time to revamp the fraud-prone payment card system through the use of personal identification number authentication.

During a recent Senate hearing on data breaches, Mallory Duncan, NRF senior VP and general counsel, cited research that proves PIN-based cards provide more security for merchants, consumers, and financial institutions.

The NRF, which represents merchants who will shoulder significant EMV migration costs, pointed out that it's possible to improve U.S. payment card security quickly by simply implementing a mandatory PIN requirement for all credit and debit card transactions, with or without an EMV chip.

“PIN transactions have one-sixth the amount of fraud losses that signature transactions have," Duncan told the committee. He added, “Protecting all cards with a PIN instead of a signature is the single most important fraud protection step that could be taken quickly. It’s proven, it’s effective, and it’s relatively easily implementable.”

Recent Nilson Report data supports the NRF’s point. Nilson found that globally PIN-based debit networks experienced the lowest fraud loss percentage of total volume with 1.10 cents per $100. That’s compared to 6.13 cents for every $100 in total volume for signature-based global brand cards.

At Shazam, we’ve long supported and highlighted the added security of PIN-based authentication. As the U.S. payment card industry, as well as American merchants and consumers find themselves in the aftermath of large-scale data breaches, there’s never been a better time to consider the proven benefits of PIN-based transactions.

About Terry Dooley

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