Credit Card Switchers: Consumers Actually Prefer PINS
According to a new survey released by the National Retail Federation, the majority of U.S. consumers ÛÓ 62% ÛÓ believe new credit cards being issued by banks donÛªt go far enough to protect card data or prevent fraud. Most say a PIN would protect data better than a signature, according to, “Consumers Say New Credit Cards Not Safe Enough.”
“Consumers are worried that chip-and-signature cards really amount to chip-and-chance,Û NRF Senior Vice President for Government Relations Mallory Duncan said. ÛÏThe chip cards are a step forward but shoppers are concerned that they donÛªt go nearly far enough. Unless the new cards require the use of a PIN, they will only provide half the safeguards needed to stop increasingly sophisticated criminals. The card industryÛªs refusal to give consumers the full protection they want continues to be a huge disappointment.Û
Among those surveyed, 62% said they prefer chip-and-PIN cards over cards that just use chip and signature, and 63% said chip-and-PIN cards provide more data security than those that donÛªt. Among Millennials, the preference for PIN was even stronger, at 71% of those between the ages of 18 and 24 and 66% for those ages 25-34
Contrary to some banksÛª claim that consumers donÛªt want to have to remember a PIN, the survey found 83% of consumers who say a PIN is more secure would consider it worthwhile even if they had to remember a different number for each card.
The survey also found 71% of consumers with a credit card have at least one chip card in their wallets, but that only 43% of credit cards are chip cards since most consumers have more than one card. Only 47% of consumers with a chip card have used it in a chip reader. The online survey of 2,035 U.S. adults ages 18 and older was conducted for NRF August 27 to September 2 by ORC International.
Starting October 1, there will be a major overhaul in how credit card transactions are processed and who is responsible for fraud costs. Under current credit card industry rules, banks are responsible for fraud losses when a counterfeit card is used and retailers are responsible when the person using the card is not the legitimate cardholder. Beginning October 1, banks will no longer honor their share of fraud costs if the card used is a chip card and the retailer does not have a chip card reader. Many retailers believe the liability shift is unfair because the chip reduces banksÛª exposure to fraud while the lack of a PIN leaves retailers exposed to fraud.
The new cards, which banks have been rolling out over the past year, use EMV technology ÛÓ short for Europay MasterCard Visa ÛÓ to store data on an encrypted computer microchip. But unlike EMV cards used around the world for more than 20 years, which include a PIN, most cards being issued in the United States continue to use a signature to approve the transaction
Over the same period, retailers have had to pay for new card readers, which average about $2,000 each when related software, equipment, installation and other costs are included, or an estimated $35 billion nationwide. Most major retailers and many smaller merchants have installed the equipment, but many have reported that activation has been held up by bottlenecks such as delays in having the systems certified by card companies. That puts many retailers at risk for liabilities through no fault of their own.
ÛÏThe chips partially address the issue of counterfeit cards, but do nothing about lost or stolen cards because thieves will still be able to sign any illegible scrawl to Û÷proveÛª that they are the cardholder,Û Duncan said. ÛÏMore importantly, sophisticated criminals can circumvent the chips, so a chip alone is not foolproof. A PIN is a secret password that makes the card useless to a criminal whether the card has a chip or not.
Consumers might be looking for new cards and switching credit cards to feel more secure. AudienceSCAN found that 7.3% of adults plan to switch credit card providers in the next 12 months. Even though women usually hold the purse strings, it’s men who will be making THIS decision — with 65% planning to switch. NOW is the perfect time to get your banks advertising their new chip cards, and they should be utilizing SEO/SEM because 44% of Credit Card Switchers responded to sponsored search result ads in the past month. Also, get them on TV, since 79% of Switchers took action after seeing spots in the past year.
AudienceSCAN data is available as part of a subscription to AdMall for Agencies. Media companies can access AudienceSCAN data through the Audience Intelligence Reports inåÊAdMall.