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Will Best Buy’s Pushback Against Visa Contactless Payment Change The Market Or Is It Irrelevant?

January 14th, 2010

From that perspective, this choice makes a lot more sense. Best Buy is not pushing back on Visa to get better contactless rates. It’s pushing back to let the brand know it’s prepared to take similar action for future interchange disputes. And if that becomes popular, Visa is going to have to make some decisions.

On its own, contactless is in trouble, mostly due to a lack (in some regions, it’s close to a total absence) of favorable consumer enthusiasm for it. Asked if that was his belief, Hogan said, “the consumer certainly isn’t clamoring for” contactless payment.

Beth Robertson, an analyst at Javelin Strategy and Research, agreed with Hogan that the publicity about Best Buy’s move might start an avalanche of Visa contactless desertion.

Although she’s heard of no other merchants planning to go Best Buy’s route, Robertson said she would not be surprised if that happens. “I think it remains to be seen whether other retailers see it as being as big an issue as Best Buy does,” Robertson said. “Not everybody will see it that way. But now that this story has broken, just the fact that it’s a little bit more public may make other retailers consider whether they want to enact a similar process as Best Buy.”

Robertson said Visa is sticking to its guns regarding its opposition to PIN. “I have spoken to Visa about it,” she said. “Their decision to not enable the PIN network is because the idea of a contactless transaction is for it to be a faster transaction. A PIN would slow the transaction and essentially cause a delay. That certainly does make sense.”

But for transactions totaling more than $25—which is true for most Best Buy purchases—some form of authentication is needed. And PIN is a much more secure and faster method than signature.

Why is a PIN faster than signature? There’s no need to grab a pen and write out the name. Many consumers can tap out a relatively short PIN in a split second.

Why is a PIN more secure? It is more secure, assuming two things are true. First, that the consumer hasn’t written the PIN on the card. And second, that the checkout people at the chain in question don’t bother to compare the signatures or, even more likely, that they haven’t been trained and tested for what to look for when comparing those signatures.

Given that most chains unofficially stopped even going through the charade of checking payment card signatures some years ago, it’s easy to see how PIN is a superior authenticator. (Seen a lot of ATMs with signature captures as the only authenticators, have you?)


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