Wal-Mart Sues Visa Over Chip Card Transactions

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Two industry giants are set to face off in court over that chip debit card in your wallet.

Wal-Mart filed a lawsuit against Visa on Tuesday, alleging the network is forcing its customers to use signatures in lieu of PINs when paying with chip-based debit cards, The Wall Street Journal reports

This compromises customers’ security, Wal-Mart asserts, making them vulnerable to fraud.

“PIN is the only truly secure form of cardholder verification in the marketplace today, and it offers superior security to our customers,” Wal-Mart said in an emailed statement. “VISA nevertheless has demanded that we allow fraud-prone signature verification for debit transactions in our U.S. stores because VISA stands to make more money processing those transactions. We believe VISA’s position creates unacceptable risk to customers and its actions and rules are inconsistent with federal law.”

Visa did not immediately respond to Credit.com’s request for comment.

Protecting Your Payment Information

Retailers have been steadily upgrading their terminals to accept chip-enabled credit cards and debit cards — which generate a dynamic security code each time you pay and are, therefore, considered much harder to counterfeit — before and ahead of new network rules that went into effect last October. These rules essentially require merchants who haven’t upgraded to cover the cost of fraudulent transactions. (Prior to the shift, financial institutions generally covered the cost of fraud.)

Chip-and-PIN cards, which are prevalent abroad, have been touted as more secure than the signature-based chip cards widely adopted in the U.S., largely due to the fact that there’s one more number a thief would need to obtain before they used a card (the PIN) and that they protect cardholders from lost and stolen card fraud.

Of course, regardless of whether you are using chip-and-PIN- or chip-and-signature-based payments, it’s important to monitor financial accounts. Chips, after all, aren’t a fail-safe when it comes to fraud. (They do little to protect your information, for instance, when shopping online.) And the sooner you report suspicious charges to your issuer, the fewer hassles and potential liability you’ll face.

You’ll also want to check your credit if you ever have reason to believe your personal information was compromised alongside your payment information. You can do so by pulling your credit reports each year at AnnualCreditReport.com and viewing your two free credits scores each month on Credit.com.

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Visa Adds New Tools to Give You More Control of Your Credit Cards

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Credit cards are getting smarter — finally. Last year, Discover launched its nifty “Freeze It” feature, which acts like a temporary on/off switch for account holders who think-they-have-but-maybe-haven’t lost their card. Now, Visa is announcing a whole set of similar app-activated “switches” that give consumers even more granular fraud-fighting and allowance-permitting tools.

Called “Visa Consumer Transaction Controls,” the new tools will let consumers set spending limits (only $500 a month for Junior), block entire sets of transactions (no online shopping for Junior), or turn cards on and off, similar to the “Freeze it” feature on Discover cards.

While Visa makes the tools available, it’ll be up to issuing banks to add the capabilities to consumers’ accounts. Software development tools will make it relatively easy for banks to add the options to their online banking apps, meaning consumers can update the controls on their mobile devices in real-time.

“By putting the account holder in charge, Visa card issuers can provide their consumers peace of mind through innovative spending controls, and more effective fraud prevention,” said Mark Nelsen, senior vice president of Risk Products and Business Intelligence, Visa Inc.

The tools might also be useful in budgeting, too. Transactions over a certain dollar amount can be banned — giving the consumer a chance to second-guess a big purchase. More important, since spending controls can be applied to different transaction types and date ranges, the controls could be used to send an alert or to freeze all spending in one area – online, for example – notifying the account holder that he or she is over budget.

MasterCard said it offers a similar spending-alert tool, called In Control, to banks that issue its credit cards.

“Once an issuing bank agrees to offer In Control, the issuing bank can choose the most appropriate deployment form for their operation and then communicate to their cardholders,” said Seth Eisen, a MasterCard spokesman. “The cardholders can then access In Control either through the bank’s mobile app or website, or by registering on a separate app or website if the bank doesn’t offer this service through their own channels.”

American Express didn’t immediately response to a request for comment.

In a video accompanying its product launch, Visa stressed the ability of parents to limit their kids’ credit card spending with the tool.

“With new digital commerce experiences emerging daily, it’s important that we provide easy and convenient ways for consumers to direct and monitor how their accounts are used and help better secure the payment system,” Nelsen said.

It’s not immediately clear when the transaction controls will be made available to consumers (Visa didn’t immediately respond to a question about that). Here’s a full list of features Visa is offering, per its press release:

  • Temporarily stop transactions. At the touch of a button, the account holder can easily turn card authorizations on and off and take immediate action should their card become misplaced, lost, or stolen.
  • Manage specific transaction types. Consumers can block or request alerts for selected activity including purchases in-store, online or internationally, as well as ATM withdrawals.
  • Set spending limits. Account holders can limit transaction size, set spending limits over a period of time, or receive spending alerts based on transaction amount.
  • Manage multiple cards. Families or businesses can define individual controls or alerts for primary cards as well as companion cards that are given to family members or employees providing more real-time control and visibility into spending. For example, a parent can share a Visa account with a child by providing a companion card with spending limits and transaction alerts that are sent to the parent’s mobile device.

Protecting Your Payments

If you’re interested in beefing up the controls tied to your financial accounts, you can contact your bank or issuer to see what types of alerts or features they may offer. You can also minimize the chances of falling victim to credit card fraud by using a new EMV chip-enabled debit or credit card during in-store transactions, sticking to encrypted sites when shopping online and not storing account information on websites.

Remember, no matter what controls you have in place, you should still monitor your credit card or debit card accounts regularly for suspicious charges or fees. If you do spot fraud, contact your issuer immediately to dispute the transactions and to have the card replaced. Finally, if you have any reason to believe your personal information was compromised alongside your payment data, you should monitor your credit. A sudden drop in your credit scores is a sign your identity has been stolen. You can keep an eye on your credit by viewing your two free credit scores each month on Credit.com.

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