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To play devil's advocate – who cares? We've had magnetic strips for decades and they work fine. Yes, they're insecure but anti-fraud measures taken by the bank

To play devil's advocate – who cares? We've had magnetic strips for decades and they work fine. Yes, they're insecure but anti-fraud measures taken by the bank can mitigate that. If this helps more stores accept payments without having a painful transition isn't that worth it? I use Apple Pay most places but I don't mind having to use a strip once in a while or if others do.

Johnie 5y ago
Think about who is paying for that fraud. Prior to EMV liability shift, Banks paid for the fraud. After Liability Shift, merchants are paying for fraud using magstripe. Merchants don't want to be responsible for the fraud, so they are incentivized to get rid of the mag stripe.
- xattt 5y ago
  I really doubt that banks will pass on the savings onto the consumer of fraud mitigation once EMV is fully implemented.
  - SilverRed 5y ago
    Who cares? Just taking the profits away from criminals would be good enough.
  - hocuspocus 5y ago
    Force them. The EU has successfully capped interchange fees in 4-party schemes.
- syshum 5y ago
  Depends on the transaction, but merchants can absolutely be liable for fraud before the EMV shift... Also the rate of mag fraud is still pretty low, more Online Fraud which was ALWAYS liable to the merchant and did not see to do much ti incentivize any changes there. Causing 90% of your customers pain to save less than 1% on fraud is likely going to cost merchants more than just paying for the fraud, which is also the math online merchants used. Online merchants that have huge fraud prevention lost more customers than the fraud.... Hell I remember one time a online merchant wanted me to submit more info after the sale for anti-fraud... I cancelled the order and bought from someone else
- djrogers 5y ago
  In both of those cases, consumers are paying for fraud.
FridayoLeary 5y ago
>painful transition How painful could it possibly be to go and buy a new card reader? Why doesn't the payments provider offer them as part of the service? They are not so expensive.
- deleted 5y ago
  [deleted]
- jjk166 5y ago
  The reader may be cheap, but the things its integrated with aren't. If it costs $20k to replace a gas pump and you have a half dozen pumps, the cost of replacing them might be comparable to the value of the gas station. A grocery store point of sale system is even more expensive, around $40k a pop. Maybe you're lucky and the manufacturer of your current setup has made it in such a way that the card reader can be swapped out without replacing the entire thing, but that's a big if. It's not like this is an investment that will lead to more customers or new revenue, this is a big expense just to stay afloat. Getting financing for such an expenditure is extremely difficult. At least in a mixed ecosystem you might be able to recoup some of the cost selling your old equipment, but no one's going to buy it if it's going to stop working soon.
  - MichaelZuo 5y ago
    It is weird that a lot of folks in the thread ignore the very real costs of transition. If there was a nationwide subsidy system for retailers from merchants and banks for fraud reduction en masse, then the transition would be smoother. But since there isn’t it’s partially an iterated prisoner’s dilemma.
  - SilverRed 5y ago
    >the manufacturer of your current setup has made it in such a way that the card reader can be swapped out without replacing the entire thing, but that's a big if. This seems to be universal in Australia. Even the mega store self serve integrated systems have a separate machine mounted on for processing card payments.
Johnny555 5y ago
Yes, they're insecure but anti-fraud measures taken by the bank can mitigate that But the bank doesn't pay me for my inconvenience in noticing and reporting the fraud, and then the time to move my recurring payments to a new card. I wish contactless payments worked with my card more places, especially gas stations.
nulbyte 5y ago
> but anti-fraud measures taken by the bank can mitigate that. Not really. Anti-fraud measures by the banks usually amount to taking the hit themselves, unless they actually catch the culprit. And that's only in the case of actual fraud. In other instances, the banks' algorithm screws up and blocks your card for a legitimate transaction. Then there's the hassle of replacing your card. In the U.S., the bank where I have my checking account can print cards in the branch, but many more make you wait for the ever-worsening postal service to deliver you a new one.
bjowen 5y ago
Anti-fraud measures for inherently insecure mag stripe are really tilted in favour of the big operators who can afford a well-skilled fraud shop or a provider who’ll happily charge millions per year in licence fees. The difference in fraud-to-total-dollars-transacted between a big player vs something like a credit union can be 20x, especially if there’s a major counterfeiting campaign. And it’s generally considered a social good not to make things easy for organised crime.
kalleboo 5y ago
The fatter margins in card processing in the US can pay for more fraud than in other countries where regulators have limited card processing interchange fees (e.g. 3% is common in the US, 0.3% is regulated in the EU)

Johnie 5y ago

Think about who is paying for that fraud. Prior to EMV liability shift, Banks paid for the fraud. After Liability Shift, merchants are paying for fraud using magstripe. Merchants don't want to be responsible for the fraud, so they are incentivized to get rid of the mag stripe.

xattt 5y ago
I really doubt that banks will pass on the savings onto the consumer of fraud mitigation once EMV is fully implemented.
- SilverRed 5y ago
  Who cares? Just taking the profits away from criminals would be good enough.
- hocuspocus 5y ago
  Force them. The EU has successfully capped interchange fees in 4-party schemes.
syshum 5y ago
Depends on the transaction, but merchants can absolutely be liable for fraud before the EMV shift... Also the rate of mag fraud is still pretty low, more Online Fraud which was ALWAYS liable to the merchant and did not see to do much ti incentivize any changes there. Causing 90% of your customers pain to save less than 1% on fraud is likely going to cost merchants more than just paying for the fraud, which is also the math online merchants used. Online merchants that have huge fraud prevention lost more customers than the fraud.... Hell I remember one time a online merchant wanted me to submit more info after the sale for anti-fraud... I cancelled the order and bought from someone else
djrogers 5y ago
In both of those cases, consumers are paying for fraud.

FridayoLeary 5y ago

>painful transition How painful could it possibly be to go and buy a new card reader? Why doesn't the payments provider offer them as part of the service? They are not so expensive.

deleted 5y ago
[deleted]
jjk166 5y ago
The reader may be cheap, but the things its integrated with aren't. If it costs $20k to replace a gas pump and you have a half dozen pumps, the cost of replacing them might be comparable to the value of the gas station. A grocery store point of sale system is even more expensive, around $40k a pop. Maybe you're lucky and the manufacturer of your current setup has made it in such a way that the card reader can be swapped out without replacing the entire thing, but that's a big if. It's not like this is an investment that will lead to more customers or new revenue, this is a big expense just to stay afloat. Getting financing for such an expenditure is extremely difficult. At least in a mixed ecosystem you might be able to recoup some of the cost selling your old equipment, but no one's going to buy it if it's going to stop working soon.
- MichaelZuo 5y ago
  It is weird that a lot of folks in the thread ignore the very real costs of transition. If there was a nationwide subsidy system for retailers from merchants and banks for fraud reduction en masse, then the transition would be smoother. But since there isn’t it’s partially an iterated prisoner’s dilemma.
- SilverRed 5y ago
  >the manufacturer of your current setup has made it in such a way that the card reader can be swapped out without replacing the entire thing, but that's a big if. This seems to be universal in Australia. Even the mega store self serve integrated systems have a separate machine mounted on for processing card payments.

Johnny555 5y ago

Yes, they're insecure but anti-fraud measures taken by the bank can mitigate that But the bank doesn't pay me for my inconvenience in noticing and reporting the fraud, and then the time to move my recurring payments to a new card. I wish contactless payments worked with my card more places, especially gas stations.

nulbyte 5y ago

> but anti-fraud measures taken by the bank can mitigate that. Not really. Anti-fraud measures by the banks usually amount to taking the hit themselves, unless they actually catch the culprit. And that's only in the case of actual fraud. In other instances, the banks' algorithm screws up and blocks your card for a legitimate transaction. Then there's the hassle of replacing your card. In the U.S., the bank where I have my checking account can print cards in the branch, but many more make you wait for the ever-worsening postal service to deliver you a new one.

bjowen 5y ago

Anti-fraud measures for inherently insecure mag stripe are really tilted in favour of the big operators who can afford a well-skilled fraud shop or a provider who’ll happily charge millions per year in licence fees. The difference in fraud-to-total-dollars-transacted between a big player vs something like a credit union can be 20x, especially if there’s a major counterfeiting campaign. And it’s generally considered a social good not to make things easy for organised crime.

kalleboo 5y ago

The fatter margins in card processing in the US can pay for more fraud than in other countries where regulators have limited card processing interchange fees (e.g. 3% is common in the US, 0.3% is regulated in the EU)