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New credit card authentication solution with a PIN

July 6, 2005

Moneris Solutions have developed a new credit card authentication solution that requires a PIN (personal identification number) to access the secure system. The new POS (point-of-sale) solution replaces older signature-based credit card authentication with a simple PIN. According to the company, people can’t forge credit card signatures with this new system.

According to Kevin Tait, spokesperson for Moneris, which prepares merchants for credit and debit card transactions, chip cards are more secure than traditional, magnetic-stripe chargers.

The PIN on a chip card precludes signature-forgeries and whereas it’s relatively easy for thieves to reproduce the information on a mag-stripe and get into a consumer’s line of credit, it’s much more difficult to do the same with chip cards.

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“The key thing is to achieve critical mass,” Tait said, noting a lesson Canadian financial handlers took from Europe, where chip cards have been in the wild for a while.

“The merchants are apt to say, ‘I don’t want to change because I’m not going to see any cards.’ On the consumer side it’s, ‘I don’t want to deal with a chip card because no merchants accept it.’”

Moneris, the first Canadian acquirer to provide chip card POS equipment, is working alongside Visa Canada and card issuers like banks to ensure all sides move with a single stroke.

Tait said Visa expects most of its cards will be chip-enhanced by 2010, but the initial chip cards will also sport mag stripes, and POS systems will be able to accept both chip cards and mag-stripe cards so neither the consumer nor the merchant gets too far ahead of the other side’s adoption curve.

He said merchants that purchase their POS equipment would have to buy new gear to get ready for the chip future, but since most of Moneris’s 350,000 merchant-partners rent POS terminals, hardware and software from the acquirer, they’ll need not fork out extra dough for the upgrade.

Moneris will take care of the cost, and the equipment should be no more expensive to rent than is common POS kit.

Tait said chip cards would likely grow to become something more than credit hooks. They might include technology that allows the consumer to apply a cash value to the card, which the carrier can use for “micro-payments” at parking metres and such. Loyalty programs could also tie into the chip card.

Tait said the chip card infrastructure is just getting started in this country. “The good news from the merchant’s point of view is because we have this five-year rollout period, you can almost replace the equipment by attrition.”

To be sure, CreArtive is ahead of the curve. “The machine’s ready but only a few [people] have the card,” Dayman said. “It won’t be for a while” that the majority of her customers tote the new kind of plastic.

Source: IT World Canada

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