NEW YORK—Walmart has filed a lawsuit in New York against Visa charging the payments network with blocking implementation of a PIN system, favored by retailers to make the new chip credit cards more secure.
The suit, filed in the New York State Supreme Court, alleges the current chip and signature system is “fraud prone,” Consumer Affairs reports.
Shortly after the Oct. 1, 2015 liability shift deadline, retailers testified before Congress that the new chip-and-signature credit cards, which do not also require a PIN, won't stop fraud.
During the hearing before the House Small Business Committee, Keith Lipert, owner of The Keith Lipert Gallery, a single-location, three-employee store in Washington, testified on behalf of the National Retail Federation on EMV. Lipert said a key concern is that the EMV cards being issued by banks in the United States are chip-and-signature cards rather than the chip-and-PIN cards used in virtually all other countries where EMV cards are used. He cited Federal Reserve statistics showing that using a secure, secret personal identification number to approve transactions is seven times more secure than an easily forged and often-illegible signature.
“We find it extremely frustrating that the card industry expects retailers and other businesses to upgrade when it will not allow the U.S. to adopt the most secure form of this technology – chips with PINs,” Lipert said.
In its suit, Walmart says credit card companies balked at imposing chip and PIN, believing consumers would rebel at having to remember another password, Consumer Affairs reported.