Europeans have been using chip cards for more than 10 years and you would think that the bugs would have been worked out of the system by the time the cards were introduced in the United States this year. Not so. Walmart has been haggling with Visa over the question of PINs vs. signatures---I get why Walmart prefers PINs since the signatures people use today are no more than electronic marks---and now VISA has countersued Walmart. Reuters in Visa countersues Wal-Mart in debit card PIN vs signature case reports:
Visa filed a lawsuit against Wal-Mart Stores on Wednesday, claiming the retailer secretly began testing a protocol that eliminated the need for signature verifications for transactions paid for with a Visa debit card. The lawsuit comes about a month after Wal-Mart had sued Visa saying the payments network operator was resisting the use of personal identification numbers by customers for purchases made on debit cards at Walmart stores. Visa said Wal-Mart did not disclose the PIN-only policy to Visa and noted a significant drop in debit card transactions at Walmart stores as well as customer complaints on their inability to use their debit cards at Walmart stores without a PIN, according to a filing in a New York court.
Any lawyers out there want to explain what this is really about? Jeff Hess: Have Coffee Will Write.


  1. UncleBob says:

    Not a lawyer and I cannot speak for Walmart in this case, but from my own time working with electronic card payments, the cost for running a card via PIN was less than running a card via signature. Anyone can “sign” your name, but (in theory), only *you* know the PIN – so it’s less likely to be a fraudulent charge if the transaction is processed with the PIN.

    Thus, most processors charge more for signature transactions than PIN transactions (because the hypothetical cost of doing a signature transaction is higher if it turns out to be a fraudulent charge).

    So, my guess, VISA wants more money from signature-based transactions and Walmart wants to cut costs by forcing PIN-based transactions.

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