They signed transaction would indeed fix this issue but it was ignored by the bank (to their detriment) for other reasons. The implementation is actually prett

They signed transaction would indeed fix this issue but it was ignored by the bank (to their detriment) for other reasons. The implementation is actually pretty decent. It doesn't require key management the way you describe it. Banks use a derived key schemes for EMV transactions. In a way you can think of it as PKI. In any event, the actual verification doesn't happen on the terminal. The terminal is supposed to take the signed transaction and pass it up through the network where it will end up with the originating bank who will say "Yes, we accept it", or "No, we don't accept this charge". This is something that happens today but it is the CC# and the CVV that get passed. If they are revealed/stolen you're screwed.