Friday, June 27, 2008

Chip and Pin or Swipe?

A couple of years ago the UK introduced credit cards with chips in them and the banks insisted that this would be the future. The chip allows a purchaser to enter a PIN number and do without a signature in order to make a transaction.

US credit cards don't have chips even though there may be a PIN associated with them. But the equipment in the UK can't handle a chip-less PIN credit card so swiping and signing is generally available. After three years of chip and pin there are times when a chip-less credit card presents problems, as we experienced today. Generally the problem is in stores that basically have a captive UK market. Any business remotely connected to tourism isn't going to reject a swipe card because to do so would be to reject a business opportunity.

I believe we can blame the banks for the intransigence we meet from time to time. They have told their customers not to accept swipe cards because they say there is more liability in accepting a signature than a PIN. I am not sure why that is the case since a PIN is easily stolen whereas a signature is hard to copy. But, of course, the banks know best! And to make the point they have told their customers that accepting a signature means that they, the banks, will not necessarily accept any liability.

These are the banks that make incredible profits when everything goes well and run to governments for bail outs when things go wrong. Perhaps mattresses work better!