Front line

[Dave Birch] I was been out pounding the beat, trying all sorts of payment experiments during my last few days in California. I have to say that the results were pretty mixed. At the airport, while being harassed by traffic cops, I couldn't find a single UK-issued card that would work in the rip-off $4 cart machines and was reduced to feeding in crumpled dollar bills (it wouldn't take dollar coins), much as my ancestors would have done. At BART, I couldn't get any of my Visa or MasterCard pre-paid cards to work (and I got an odd error message a couple of times: "bank not on file"). I did get my UK prepaid Visa card to work in a couple of shops (I discovered that when asked "credit or debit", always reply "credit" even though it's not a credit card, because if you reply debit it doesn't work). I couldn't use it in one shop because the assistant insisted I present ID, which I didn't have. Later in the day, my wife bought something with her UK MasterCard and was asked for ID so she presented her British driving licence, which was dutifully accepted even though the assistant couldn't possibly have known whether it was real or not. Come to that, they probably wouldn't have been able to tell whether her US driving licence was real or not either.

Interestingly, my prepaid MasterCard contactless sticker worked perfectly in 7-Eleven, and I have an independent witness and photos to prove it (thanks to our good friends at Glenbrook). But my UK contactless Visa cards were not recognised in any US terminals. Why? Because the sticker is MSD and the cards are EMV and the US terminals aren't reading EMV contactless (although terminals here in Singapore do).

The result of all this is, essentially, that when I walked into a shop, I had no idea which cards would work properly or not. The whole system is beginning to annoy customers, and I just can't see how it can continue this way, with US customers having their stripe cards refused in the UK and UK customers having their cards refused in the US. Time for some change.

Who has to give? Does the US give in and switch to EMV or do we all forget about MSD, EMV, plastic cards and magnetic stripes and start planning (with all of the stakeholders) for the next generation? That might be a bit too radical, to be honest, but the industry will need a push from somewhere. The Feds?

If the U.S. government mandated the switch to digital T.V., why can't it mandate that credit and debit card issuers switch from magnetic stripe cards to chip-based payment cards that require a personal identification number for additional security? Richard Oliver, evp of the Federal Reserve Bank of Atlanta's Retail Payments Forum, posed that question recently and argued that the growing security vulnerabilities posed by magnetic stripes may warrant policy action by the government.

[From The Fed Gets Involved with EMV – Bank Technology News Article]

As Nick Collin and I were discussing in a recent podcast, we may be heading toward an inflexion point where the $7 billion US card fraud problem combines with mounting hassle for transatlantic travellers (in both directions) to the point where US banks, retailers and other stakeholders have to make a firm timetable to move away from magnetic stripe.

But to what?

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]