A Tale Of Chip and PIN

I went in to my local grocery store tonight and went to use my credit card and poof – something new.

A couple of details first.

My credit card is actually a Visa logoed debit card meaning that, in theory, you should be able to use it as a debit or credit card.  Debit with a PIN, credit with a signature.

The store, King Soopers, a subsidiary of Kroger, the mega- supermarket chain, just upgraded their point of sale terminals this weekend to accept chip cards.  A little late, but better late than never.

There is now a hand written sign on the register that says all debit cards now require your PIN.

So why is this of interest?

First, my bank has set up the credit card to be chip and signature and, according to my bank, there is no way for the store to change that to chip and PIN – the card is actually set up differently.  This means that the store – King Soopers in this case – is completing the transaction as a debit card instead of credit card.  Why might they be interested in doing this?  Well, possibly, they think PIN transactions are less likely to be fraudulent.  Also possibly, debit network transactions are dramatically cheaper for the store.  Why do you think, for example, Walmart has made it very obscure for you to use your debit card as a credit card in their stores for years?  Money!

I have written before that chip and PIN is more secure than chip and signature, so why am I whining.

In the interest of full disclosure, I am not sure that I am whining – I am just not sure one way or the other.

My first complaint is that King Soopers is not being transparent with their customers.  For years I have used by Visa logoed debit card as a credit card and now, all of a sudden, with no explanation of what they are doing, they are forcing this to be a debit card transaction.  In terms of my bank account balance, there is no difference, so why do I care?

In part because I don’t trust their security.  Just this part month, Safeway stores discovered skimmers on a number of credit card terminals in their stores, including one near me.  If this happens to King Soopers and they have the card information and the PIN, they could, potentially, empty my bank account.  If someone has my PIN, is the bank going to say that it must have been me that withdrew the money from the ATM?  It could be a fight.

Next, there are very different federal laws regarding recovering from fraudulent transactions between credit and debit cards.  Radically different.  Even if the bank says that they will treat them the same, the LAW is very different.  The law favors credit cards,

SO what I told King Soopers is that, for the moment, I have decided not to shop there any more.  In part this is my way to vote on the lack of transparency.

Obviously, if I needed to shop there, I can pay cash.  There is an ATM in every grocery store if I don’t have cash.

I can also use a true credit card – they can’t force that to be a debit card – although I have not tested that, I am pretty sure that is true.

I may change my mind at some point in the future.  Right now, I am writing this to make sure that people ARE educated and understand what the situation is.  Most people are not as paranoid as me and won’t consider this to be a problem.  Who knows – maybe they are right.

by