Retail giant Wal-Mart is reported to be planning on making all its payment terminals in the U.S. compliant with a smartcard-based credit card technology that is already widely used around the world, but not in the U.S.
Wal-Mart's plans were disclosed at a smartcard conference being held this week, and was first reported by StoreFront Backtalk earlier on Thursday.
StoreFront quoted Jamie Henry, Wal-Mart's director of payment services as saying the retailer was working on making all payment terminals in its domestic stores Chip and PIN capable. Henry was reported as having said that for Wal-Mart, signature-based credit-card transactions had become a "waste of time."
Such a move by Wal-Mart would have a widespread ripple-effect across the payment industry. As the largest retailer in the world, a Wal-Mart decision to support chip-and-PIN could finally nudge card issuers, processors and other merchants to start adopting the technology.
Until now, such organizations have been reluctant to move to chip-and-PIN systems because of the perceived costs associated with upgrading to the technology. Merchants must upgrade or replace all their existing terminals to accept the smartcard transactions. Banks, too, would need to issue new cards to customers.
Smarrtcards cards use an embedded microprocessor (the chip) rather than a magnetic stripe to store cardholder data. To use the cards, a cardholder usually has to enter a Personal Identification Number (PIN) when making a transaction.
Smartcards are thought to be significantly safer than magnetic stripe cards, even though security researchers have recently demonstrated how chip-and-PIN transactions can be broken. Most smartcards in use today are based on the Europay MasterCard Visa (EMV) smartcard standard from the major credit card companies.
Though most of Europe and several countries around the world have moved to the EMV technology a long time ago, the U.S has been a notable hold-out largely because of the cost concerns.
That's because until recently, the costs of moving to smartcards outweighed the fraud risks associated with signature-based technologies, said Ray Wizbowski, director of marketing strategy for Gemalto NV, an Amsterdam-based smartcard vendor with U.S. headquarters in Austin.
But that equation has begun to change quite quickly, Wizbowski said. With most major economies already standardized on EMV cards, credit card fraud has begun "migrating" to the U.S in a big way because magnetic-stripe cards present an easier target, he said.
The fact that U.S. cardholders are already finding it increasingly difficult to use their magnetic stripe cards outside the country could also become a big driver, Wizbowski said.
Wal-Mart's plans were disclosed at a smartcard conference being held this week, and was first reported by StoreFront Backtalk earlier on Thursday.
StoreFront quoted Jamie Henry, Wal-Mart's director of payment services as saying the retailer was working on making all payment terminals in its domestic stores Chip and PIN capable. Henry was reported as having said that for Wal-Mart, signature-based credit-card transactions had become a "waste of time."
Such a move by Wal-Mart would have a widespread ripple-effect across the payment industry. As the largest retailer in the world, a Wal-Mart decision to support chip-and-PIN could finally nudge card issuers, processors and other merchants to start adopting the technology.
Until now, such organizations have been reluctant to move to chip-and-PIN systems because of the perceived costs associated with upgrading to the technology. Merchants must upgrade or replace all their existing terminals to accept the smartcard transactions. Banks, too, would need to issue new cards to customers.
Smarrtcards cards use an embedded microprocessor (the chip) rather than a magnetic stripe to store cardholder data. To use the cards, a cardholder usually has to enter a Personal Identification Number (PIN) when making a transaction.
Smartcards are thought to be significantly safer than magnetic stripe cards, even though security researchers have recently demonstrated how chip-and-PIN transactions can be broken. Most smartcards in use today are based on the Europay MasterCard Visa (EMV) smartcard standard from the major credit card companies.
Though most of Europe and several countries around the world have moved to the EMV technology a long time ago, the U.S has been a notable hold-out largely because of the cost concerns.
That's because until recently, the costs of moving to smartcards outweighed the fraud risks associated with signature-based technologies, said Ray Wizbowski, director of marketing strategy for Gemalto NV, an Amsterdam-based smartcard vendor with U.S. headquarters in Austin.
But that equation has begun to change quite quickly, Wizbowski said. With most major economies already standardized on EMV cards, credit card fraud has begun "migrating" to the U.S in a big way because magnetic-stripe cards present an easier target, he said.
The fact that U.S. cardholders are already finding it increasingly difficult to use their magnetic stripe cards outside the country could also become a big driver, Wizbowski said.
