Keep an eye on your chip card.

Card/payment security is a key topic within organizations’ Commercial Card policies and procedures. You know the drill: lock them up when not in use, ensure a website is safe before entering payment information, be attentive to phishing tactics, etc. Have you overlooked anything? Maybe. According to sporadic media reports, a risk associated with chip cards is that the chip could fall out. The risk is very small, but possible. A displaced chip could be used to create a counterfeit card, but this requires a fraudster getting a hold of it. 

Generally speaking, chip cards are durable. I’m aware of card issuers trying all sorts of things to test the durability; for example, putting them through the washing machine. (Yes, the cards came out fine.) Now the question is, what should you do with this news?

What to Do

As part of your Commercial Card program management efforts, communication is important. The best overall advice is to be mindful, but not get hysterical.

  • Make cardholders aware.
  • Update your training presentations accordingly.
  • Ensure your policies and procedures direct cardholders to contact your card issuer if they realize their chip is missing or even loose.

To date, I have not heard of any chip problems with Commercial Cards. However, industry professional Theresa Blatner informed me about a case at her workplace involving an employee’s personal card. She explained, “It was being used in our cafeteria. I contacted the café manager who said that the chip was loose on the card. The reader indicated an error and defaulted to using the mag stripe. He also said that he has seen a few cards with faulty chips—two of them where the chip fell out.”

Final Thoughts

The small risk of chips becoming loose or falling out does not detract from the benefits of card usage. Chip cards still offer greater security than cards with only a magnetic stripe and, with any type of card, there is fraud protection. All this being said, it could be a driver for increased adoption of mobile payments if/when it makes sense. The beauty is, we have all sorts of options within the realm of Commercial Cards.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Are we ready for chip cards?

The October 1 liability shift in the United States is less than two months away. Are merchants equipped to handle chip/EMV cards? According to an article published by TheStreet, 47% of all merchant terminals will be able to read chip cards by the end of 2015. Further, are cardholders and merchant clerks prepared by understanding how to use the cards? Through my own informal study, I would say no for the most part.

Cardholder Confusion

As Commercial Card professionals, we have a head start on being familiar with chip cards, but, if you question your friends and family on this topic, you might get blank stares. This has been my experience.

TheStreet article reported that, by the end of 2015, 63% of credit and debit cards will be chip enabled. When I received my new business credit card with a chip, an accompanying brochure explained how to use it. I wonder how many cardholders will bother to read such material. Either way, I think my brochure is unclear. For example, it says I can still swipe my card at merchant locations with magnetic stripe point-of-sale (POS) devices. Hmmm... Since basically all U.S. merchant terminals will still have magnetic stripe readers, it sounds like I can ignore the chip altogether. Not so fast. Chip-enabled devices could generate an error message if a cardholder tries to use the mag stripe.    

An article by Computerworld noted a consumer might give up using a chip card because the process takes at least a couple seconds longer than the “old way.” The article also described how the payment confirmation will vary by terminal type or store, which could cause confusion.   


Merchant Confusion

When out shopping, I have been randomly asking store clerks if they are seeing many chip cards. One replied, “Do you mean a card that they wave over the machine?” Well, maybe—if the terminal supports near-field communication (NFC) technology—but when I pointed out the chip card slot on the POS device, she admitted she had not noticed that before. At a different store, a clerk said he did not know whether “that slot” worked.

Generally speaking, clerk training seems to be lacking. Pair untrained clerks with unaware cardholders and we get significant potential for checkout hiccups until everyone adjusts. 

While POS equipment no longer looks like this, many U.S. merchants will not have chip-ready devices by year end.

While POS equipment no longer looks like this, many U.S. merchants will not have chip-ready devices by year end.

What You Can Do

Per my advice in the January blog post on the different EMV options, if you are an end-user organization, ensure you understand your type of chip card, requirements for usage, what could go wrong and how to resolve any issues. For cardholders who make in-person purchases, train them accordingly.

Visit GoChipCard.com

You do not need to create training from scratch. The EMV Migration Forum and the Payments Security Task Force developed GoChipCard.com to assist consumers, merchants and issuers with the migration to chip technology.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Restacking the chips—pros and cons of EMV options.

Have you formed an opinion yet on the topic of chip-and-PIN versus chip-and-signature cards? Maybe you saw the recent news that many U.S. banks are leaning more toward the latter, which is less secure. I wondered about the reasons for this since other countries have already predominantly adopted the more secure chip-and-PIN. However, before diving in further, we cannot forget that any card with a smart chip and the EMV security standards is more secure than cards with only a magnetic stripe.  

On the PIN vs. signature topic, I found some great insights in an article by Brian Krebs of Krebs on Security in which he interviews industry experts from Aite Group and Gartner Inc. I highly recommend you read it, but following is a summary of two key considerations at play.

Ease of Use

Chip-and-signature takes the lead, being quicker and easier to use at the point of sale. Chip-and-PIN requires the extra step of entering the correct PIN (personal identification number). If the cardholder forgets the PIN, he or she would need to pay a different way or abandon the purchase altogether. These are not good outcomes for the card-issuing bank or your card program. 

Then there is the issue noted by Jack Jania, Gemalto Inc., during my 2014 interview with him: limitations of the current U.S. ATM infrastructure to manage card PINs in the field. Since the PIN is tied to the smart chip, it is not easy to reset. As a last resort, the bank might need to reissue the card, which is another hassle for everyone.

 

Protection for Lost or Stolen Cards

The advantage here goes to chip-and-PIN since a lost or stolen card would require a fraudster to enter the correct PIN in order to use it. With a chip-and-signature card, a fraudster could forge the cardholder’s signature at the point of sale and/or use the card at an unmanned kiosk or terminal. 

Is it a gamble or good business decision for banks to go the chip-and-signature route? Probably a mix of both.

Is it a gamble or good business decision for banks to go the chip-and-signature route? Probably a mix of both.

Given the above plus other nuances, each bank needs to decide what makes the most sense for its business. If you are an end-user organization, ensure you understand what type of card you have, requirements for usage, what could go wrong and how to resolve any issues. 

For more on EMV, see the related webpage.

Related article: Banks Opting For Less Secure Signature Cards, January 6, 2015, PYMNTS.com.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Subscribe to the Blog