What does Home Depot suing Visa and MasterCard have to do with travel?
Home Depot is alleging that Visa and MasterCard worked to block chip-and-PIN EMV service in the U.S.
Last week, Home Depot, the big box home improvement retailer, sued MasterCard and Visa in federal court alleging antitrust violations. I know you are thinking, "So what? This is a travel blog." Very true but I am hoping this lawsuit could result in it being easier to use U.S. credit cards internationally. Bear with me for a second.
You can read all the business and financial technology angles in the ZDNet article, but the main thrust of this lawsuit is pretty simple:
“Among a bevy of grievances, the do-it-yourself retailer posits that Visa and MasterCard sought to block the adoption of chip-and-PIN on credit card transactions following the migration to EMV payment security standards last October. Additionally, the retailer argues that chip-and-signature is simply less secure than its chip-and-PIN counterpart.”
If you travel internationally, you were likely familiar with EMV credit card technology before its rollout in the United States in the last year. This deployment is still a work-in-process as most of our cards have been replaced but not all retailers support the chips. However, there is a significant difference in our implementation in that the United States adheres to the chip-and-signature variant of the standard while Europe and other parts of the world use chip-and-PIN. The distinction is simple. Chip-and-signature is similar to using old mag stripe cards: insert the card in the card reader then sign a credit card receipt. Chip-and-PIN replaces the signature with a PIN that is entered by the user at a point-of-sale terminal. As you can readily see, knowing the PIN for a fraudulent credit card is far more difficult than scrawling a signature that sales clerks rarely scrutinize. While Home Depot's concern lies in this difference in security, the international traveler would strongly benefit from the convenience of chip-and-PIN.
U.S.-issued EMV cards have mixed success in Europe. Some banks do have a PIN version or a PIN backup to the signature, but most do not. This is primarily an issue when trying to use U.S. cards in overseas automated machines or kiosks. Without a PIN, many of the points-of-sale won't accept the card. When I was in Paris last year, one of my EMV cards - none of which has a PIN backup - worked in the Paris Metro ticket machines, while another did not. If this lawsuit is ultimately successful in pushing U.S. card issuers to switch to the chip-and-PIN model, this would greatly ease the use of American cards overseas.
I have no idea about the legals merits of the claim or the likelihood of any particular outcome, but I am curious to see how this lawsuit proceeds. However it is resolved legally, I do hope that in the not-too-distant future, we will see more support of chip-and-PIN for U.S. credit cards.