Cards using chip and PIN potentially more secure for small businesses

| Many small businesses believe credit cards using chip-and-signature authentication over chip-and-PIN put them at unnecessary risk for fraud.

Businesses in today's technology-driven consumer market need to lean heavily on reliable systems that ensure productivity and customer satisfaction, while also maintaining data security. The segmented EMV mandates of last few years allow compliant companies to better keep customer financial information safe and prevented many instances of fraud and data theft.

However, some businesses, specifically small ones, feel certain credit card-related security measures could be increased further. The majority of credit cards issued in the United States today use chip-and-signature instead of chip-and-PIN verification. Almost 50 percent of small retailers believe cards requiring a PIN over signature would do more to keep their businesses secure, according to a National Retail Federation Survey. 

"Chip-and-PIN cards are standard in most international countries."

Signatures do not always equal safety

PINs and signatures on EMV credit cards work as second forms of authentication. According to Credit Card Insider, PINs are considered more secure than signatures because generally, only the cardholder is capable of providing them, rendering the card useless if stolen. Transactions with chip-and-signature cards can easily be fraudulently signed for by a thief with a stolen card.

Banks determine the security measures present on their issued cards. Chip-and-PIN cards are standard in most international countries using EMV. In addition to increased security, banks sometimes issue cards with PIN and signature functionality to make them more compatible overseas.

According to a National Retail Federation report, in 2015 ahead of the first EMV directive, the FBI planned to issue a mandate requiring banks to distribute cards with chip-and-PIN capabilities. However, banks argued the initiative would be too costly and the FBI later reversed their decision. It instead issued a public service announcement about the potential dangers of using signature confirmation over PIN.

The NRF survey also pointed out that, by the end of the year, around 81 percent of America's small brick-and-mortar businesses will have installed chip card readers. But even with the upgrade in technology, they fear the use of signature-based EMV credit cards could still put them and their customers at risk for being victims of fraudulent activities.

Many businesses are adopting other means of data protection. Another NRF survey found 93 percent of retailers will implement point-to-point encryption by the end of 2017.

Cloud 9 has many hardware and software solutions companies can use to increase their security. To learn more about effective card processing software, get in touch with Cloud 9 today.