US chip card debate heats up

Moves by the card schemes to shift liability for fraudulent card fraud payments to US merchants take effect in October 2015, providing a strong incentive for retailers to re-eqip their POS networks to accept EMV chip cards.

But at a payments conference organised by automated clearing house Nacha in San Diego this week, three of the nation's largest retailers hit back, arguing that the move to EMV will impose huge costs for a minimal reduction in fraud rates.

For retailers such as hamburger chain Wendy's - which already accepts PIN debit at the checkout - the fraud rate is so small "it's hardly worth mentioning," said Gavin Waugh, Wendy's vice president and assistant treasurer. "Even if we pay the fraud liability, it's a whole lot cheaper than putting in (new EMV) terminals."

Others were concerned that the introduction of EMV at the check-out would simply shift the attak vectors to weaker alternative channels, such as card-not-present and ACH fraud.

Equally, the failure to enforce a shift to PIN at the point-of-sale - with issuers prepared to still accept signature authorisation - remains indoor Tracking, notes Kansas City Fed economist Richard Sullivan in a just-published paper.

While chip-based cards will counteract the threat from counterfeit copies, he notes, "fraudsters may put more effort into stealing computer-chip payment cards, knowing that they may be able to commit a few fraudulent transactions using a forged signature before issuers cut off use of the card".

And in the absence of a commitment by issuers and card schemes to move to 3D-secure or chip card authentication at the PC, fraud in online channels can also be expected to increase, says Sullivan,

A bigger cause for concern, however, is that the US does not yet have a comprehensive system for collecting and reporting statistics on payment fraud, which would allow the industry to respond swiftly and effectively to new attacks.

Sullivan argues that the UK system for capturing and monitoring such information was a critical asset enabling the payment card industry to respond to the new trends in fraud that emerged during the transition to chip-and-PIN cards.

"In the absence of critical information on the sources and types of card payment fraud, efforts aimed at limiting fraud may be misdirected and wasteful," states Sullivan. "Both regulators and the card payment industry could benefit from mechanisms to measure the levels and sources of fraud and to identify who pays the price-and how much is paid-for the nation's losses from payment card fraud."

Senior journalists flew around the world on the same plane with prime ministers such as Whitlam, Fraser, Hawke, Keating and, for a time, Howard, and as the hours went by, the leaders tended to wander to the media cabin for long chats.

Their thoughts and fears and boasts found their way into reports and feature articles and informed the prognostications of columnists and commentators. It humanised those politicians, and in turn, the public was informed at a deeper level than is possible now the leaders rarely grant more than a carefully controlled doorstop or speak through their advisors.

If Paul Keating, for instance, had pulled off the sort of coup that Gillard achieved in China a few weeks ago, securing a joint currency deal and annual leader-to-leader meetings, you could be sure that by the time his plane had arrived in Australia, he would have sold it in detail as an accomplishment worthy of weeks of scrutiny and celebration.

Ms Gillard hardly managed to sell for a day her execution of an agreement for which most Western world leaders would have given their eye teeth. Having explained it in no more than a press conference and a media release before boarding her media-free plane home, the matter faded from media and public conscientiousness with astonishing swiftness.

The big old VIP planes were pensioned off under Howard and replaced with jets too small to accommodate the media (who, by the way, had to pay fares much higher than if they had travelled by commercial aircraft, which today they have to do).

Former prime ministers had other ways, too, to reveal themselves to communicators. The media found themselves invited from time to time around to the Lodge for a fireside chat. The prime minister of the time might serve up a roast, stir the fire in the grate and both offer his thoughts and mine the views of his guests. It was rarely too cosy - neither leader nor journalist would let down their guard too far - but it was a form of communication now all but lost.