Quote:
Originally Posted by HarryT
Both credit and debit cards in the UK and, I believe, in most Western European countries, have been "chip and pin" for many years; I don't know how many years it is since I last signed for a card transaction - quite a few, certainly!
Any idea why it's not been implemented in the US thus far? I don't think it's the doing of MasterCard or Visa, since both of those are chip and pin elsewhere.
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Mastercard and Visa aren't a single entity, for practical purposes, in the US. There are probably thousands (certainly hundreds) of different banks that issue the cards, and hundreds of merchant services that process them. That means a
lot of coordination (which means extensive, and expensive, software rewrites to handle it all).
On the merchant end, there are expensive equipment upgrades to consider. Current credit card processing machines are magnetic strip readers only. To do chip-and-pin, you need a different pad entirely, and they aren't all that cheap. (My employer has nearly a hundred units, which cost about $1,000 each. More sophisticated chip-and-pin pads would, presumably, be more. We
could upgrade them, and it wouldn't put us out of business, but it wouldn't be a trivial expense.) Many merchants still use the old, dumb machines that dial out over a phone line.
And then there's just inertia. If the current system works, and it has for many years, why spend billions to change it? But one of the two big companies (Mastercard, IIRC) is currently in the planning stages of implementing chip-and-pin, and the other (and Discover) is expected to follow suit soon. I believe American Express already has a chip-and-pin solution out there, but it won't be commonly used until merchants have incentive (which Mastercard and Visa will give them) to upgrade their equipment.
The current plan is that it will take about a decade before there's any real chance of getting rid of the old mag strip only system.