This is supposed to be much bigger than the Target breach. If this doesn't give the move to the more secure EMV chip and pin method in the US, nothing will.
When you pay using the debit card, you have to insert the part of the card with the chip into a reader and enter your pin. Typically you can not do this until the cash register has transferred the amount to pay to the terminal.
You can also use it as a credit card when abroad or even in Norway. However, I'm not sure if the card will actually allow you credit (i.e. borrow money) per se -- I believe the account must have a sufficient positive balance, and I believe the domestic terminals are able to check that in real time (i.e. in a few seconds) and decline the sale if not funded.
As for online purchases, every time I use it as a credit card, I get re-routed to a card verification process. This means I get taken to some third party site (typically Visa or MasterCard) where I have to authenticate using my password and generate a one-time password (pin) on my phone. You can also use a FOB, but I find a phone more practical. After the verification is done, you get taken back to the merchant site. This is the same verification process that is used for online banking.
After living 15 years in the states I found this to be a bit annoying at first, but that had more to do with the speed of the implementation and the fact that it's applet-based (Java and Chrome -- have to switch browsers and hope that you don't lose your session).
If I had to authenticate every time I bought something on Amazon it would get old pretty fast. However, one could simply authenticate once to indicate that this merchant is trusted. A new merchant would trigger the authentication before the transaction can be accepted.
[1] http://blogs.wsj.com/corporate-intelligence/2014/02/06/octob...
The difference between US banks and mine though is that if I try to pay by signing my bank won't authorise it - I have to enter my PIN (and sometimes sign too) to make a payment.
Payments online is more of the retailers fault though. They shouldn't accept payments where the CVV check or address check fails. Here in the UK most retailers won't accept payments unless it all matches up, but as I understand this isn't as common in the US.
The problem is inertia, nothing else.
Recently many places also support RFID with no pin required for small purchases (I think it's €25). Goes much faster than the employee can bag your order up.
I was surprised to find in Safeway recently that a < ~$20 transaction required no signature either.
For instance, one oft used optimization is that you can insert the card in the reader prior to the register sending the amount to the chip&pin terminal.
Some other problems with chip-and-pin:
- You get really cheap merchants who would prefer to waste your time rather than shell out for the contactless reader.
- You get international merchants who have no idea what's going on and make you sign two receipts in addition to entering your pin after trying and failing to swipe it twice.
- You have to type your pin in with your bare hands in -40C weather at the gas station.
- You have to tip waiters with them standing right there and judging you.
- It breaks square and the like
IMO it's an unnecessary mess for anything under ~$50.
Online it's not a problem either (fairly easy integration here with a system called 'iDeal'), typing in your pin at -40C at the gas station is still a requirement with the current prices of gas and I'm not one bit bothered by 'waiters judging me', that's a self esteem issue, not a technical one.
As for international merchants who have no idea what is going on: I spend more time abroad than I do in my home country and chip-and-pin have made my life a lot easier than it ever was before in this respect.
Something like 7 countries in the last 3 weeks and I have yet to use my 'cash backup' or my 'credit card backup'.
Contactless is a nice technology but it is as far as I'm concerned a step backwards, I can see the advantages only for bars and festivals where the risk of contaminating your card with fluids is significant and purchases are very small (<$10).
Well YMMV, of course, but here in Vietnam I've had to go around the other side of the checkout to type in my pin because the terminal was bolted to the desk. Multiple times. And then they still make me sign two receipts anyways.
https://www.pacnetservices.com/wpg/country.php?alpha2=VN
Has a pretty explicit note that Vietnam is still primarily a cash based society, I think that is where your problems stem from, not necessarily from the technological merits or lack thereof of chip&pin.
Paypal provide a Chip-and-PIN payment system for mobile devices here in the UK[0]. It'll break Square no more than it breaks everything else; I have no doubt that Square already have a working prototype of such a thing.
[0] https://www.paypal.co.uk/blog/paypal-here--paypal-s-new-chip...
In the US currently you write down the tip and leave, they can then charge you whatever they feel like after you're gone. As a tourist I was really paranoid about this, as by the time I looked at my statement when I got back I had no idea which charge was which restaurant and how much it should have been.
A common thing to do in the UK is pay without tip on card, then tip in cash
There is lots to optimise, but chip and PIN is not inherently slow. In fact, for me it’s already as fast as cash in most cases.
I really can't say I've ever felt frustrated waiting for the person ahead of me to pay (except for maybe old people hand writing checks at the grocery store—and even then it's kind of interesting to see such old-school payments in action).
Debit or credit? Debit is the default everywhere. Why? Because credit has a surcharge for the merchant.
It is complete bullshit that the merchants put the onus on their customers and then shrug their shoulders when fraud happens. At least with credit you are insured. They get your pin and you are screwed.
Here's a 1:47m video from MasterCard explaining it: https://www.youtube.com/watch?v=DkxxhvVJjuM