Monday, March 13, 2006

PIN scandal "worst hack ever"

PIN scandal "worst hack ever"; Citibank only the start

The article suggests that consumers "never" enter their PIN at the point of sale. If consumers adopt this behavior, then merchants will be foreced to pay the higher "signature debit" interchange rates on PIN debit transactions. Prior to this hack, PIN Debit Fraud at the POS was 16 times lower than signature debit. Visa announced it's Interchange rate would remain virtually unchanged from last year, but look for PIN debit rates to go up next year.

More importantly this creates a potential problem with the U.K.'s Chip and PIN program. Prior to this hack, some media outlets were suggesting that Pay by Touch may replace Chip and PIN. The timing of PBT's launch into Europe is also interesting because it coincides with a report by Unisys that 73% of Brits chose biometrics as the preferred technology in the fight against fraud.

This is a developing story that will have a huge impact on the payments industry. If PIN's cannot be trusted at the point of sale, then what is the alternative? The writings on the wall.