As retailers spend billions to upgrade their point of sale terminals to accept new "chip" cards before the October 1st liability shift deadline, the nation's largest card network acknowledged that a staggering number of magnetic "swipe" cards have not been replaced with new cards.
The most recent numbers announced by VISA indicate that less than one-fifth (18%) of their 720 million debit and credit cards as of July contain a new embedded chip and will be ready for the October 1st EMV shift.
"Large retailers have made tremendous progress installing, testing and now operating new payment terminals to accept chip cards," said Brian Dodge, executive vice president of the Retail Industry Leaders Association (RILA). "But while consumers can now spot these new point of sale terminals at many large retailers nationwide, a quick check of the wallet will confirm that many continue to carry cards secured with the outdated and vulnerable magnetic stripe."
With the October 1 deadline quickly approaching, it is more apparent than ever that most card issuers are not ready for the shift.
Throughout 2015, retailers have expressed frustration with banks and credit unions for issuing chip and signature cards, instead of the chip and PIN (personal identification number) cards issued everywhere else in the industrialized world. The PIN adds a second layer of security making lost and stolen cards impossible to use and counterfeit cards more difficult to create. Two factor authentication has been the standard in the United Kingdom (UK) for almost a decade, reducing counterfeit card fraud by 56%. Instead of issuing these cards to their American customers, banks and card networks in the US are only issuing chip and signature cards. Asked why, many bank and card network executives have suggested that Americans are not capable or remembering four-digit PINs, despite the fact that most Americans use PINs to unlock their cell phone on a daily basis.
"Simply put, consumers should be outraged that for banks and credit unions the solution to increased cyber-related fraud is to slowly issue substandard cards," concluded Dodge.
RILA is the trade association of the world's largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.