Can merchants require use of PIN number for any & all debit or credit card transactions?
I am considering starting a retail business in which I would have high volume in credit/debit card transactions. Fraud and the related chargebacks are a big concern for me. When I set up merchant accounts with Visa, Mastercard, etc. - is it possible to have the PIN number required on all transactions, whether debit or credit? I would like to completely eliminate the possibility of a credit or debit card being swiped and approved UNLESS the correct PIN is entered by the consumer in possession of the card. I believe that each and every credit/debit card has a PIN associated with it.
All (non-proprietrary) credit cards can be used for cash advances from an ATM. To do so requires the credit card PIN. Therefore, I believe all credit cards have a PIN associated with them.
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7 comments
Jason Bordeaux on July 9, 2009 at 4:38 am
Plain and Simple:
If you choose to accept only debit cards, you can require a PIN.
If you accept both credit AND debit cards, you not only cannot process with a credit card PIN (which is only requested for an ATM or a credit card terminal that is set up for cash advance) but you must also process an offline debit card transaction (signature instead of PIN) upon cardholder request.
You could probably set up a cash advance terminal for credit cards, but I suspect that would be rarely used. It’s terribly expensive for the cardholder and most cardholders have no clue what their credit card PIN is.
Your best bet is to match credit cards with a photo ID and assure that the signature is a match. If a credit card cannot be read by your terminal, this is a red flag. Do not complete a key entered sale unless the address verification information and CVV code are a match - your terminal should have the software downloaded to perform these tasks.
Even if you do all of this, though, you are at some risk of fraud. This is unfortunate but true. I liken this risk to robbery, shoplifting or counterfeit bills. In many cases you can make a theft claim to your insurance company if you can show that reasonable measures are in place to deter fraudulent purchases. Assuring that you are PCI Data Security Standard Compliant is your best bet. Compliance also assures that you will not be fined by MasterCard and Visa for being duped - take a look at your merchant processing agreement and you will see that it states that you are responsible for adhering to card association standards and all penalties for transgressions.
Below, I have provided links from MasterCard and Visa which we provide our customers. One is a security webinar and the other discusses PCI compliance. They are a great start towards assuring that you minimize your risk.
Good luck with your new endeavor!
man_of_mustard on July 9, 2009 at 4:38 am
I don’t think so. You can’t make a credit card user enter a PIN number unless the credit card company issues them one.
Diane W on July 9, 2009 at 4:38 am
Credit cards don’t have PIN’s attached, that is why they are required to sign the slip and your due diligence is to ask for other ID to compare the signature with. Debit cards require a PIN because they are paperless transactions. Only the cardholder should have the PIN. It is assumed that anyone who has the PIN is authorized by the cardholder to use the card.
Chargebacks are an unfortunate part of doing business. However, you don’t want to refuse people service because you are scared. You might want to contact the Visa and MC people directly and find out what your exposure is. I don’t think they charge it back to the merchant but rather absorb the losses themselves (I believe they have insurance for this purpose), but don’t quote me on that.
Good luck with your new store! Diane
storm13 on July 9, 2009 at 4:38 am
no it is not you can only get PIN on debit transactios but you can ask for more ID with pics on credit charges there is not much you can for credit cards but another thing is have securty cam’s at the cash so you have pic of them and keep them for aleats 60 day’s it is alot of work but will protect you in the long run
Stephen M on July 9, 2009 at 4:38 am
Current Debit cards require a PIN. Credit cards do not currently require a PIN, but that is changing. Smart Credit Cards are coming to North America with pilots starting in a number of cities in Canada. Hopefully this will cut down on credit card fraud dramatically.
If you are located in Canada drop me a note and perhaps I can help you get set up with POS.
Cliff P on July 9, 2009 at 4:38 am
Ok Here it is. You are the Merchant. You can request all your customers to use their PIN # for Debit and Check Card transactions. Credit Cards not attached to a bank checking account do not have pin #s, yet.
You must understand that you processor will charge a different rate for a PIN entered transaction than a signature check card. You can expect to pay about $0.65 flat fee for a PIN transaction, and about 1.5% and $0.25/transaction for a signed Check Card transaction. If your average sales is above $40 then it would be a great idea to request all your customers to use PIN only. If your average transaction is under $40 go with the signature based transaction.
As far as Smart Cards coming to US, thats a long way off.
If you need more information on the cost of accepting credit cards you may visit:
http://www.omnitranz.com
Much success to your business!
gpatrick900 on July 9, 2009 at 4:38 am
Not the way your are wanting to do this.
Here are some options
Take only debit card with interlink, star, nyce, pulse, maestro, visa interlink, visa plus, cirrus, etc and don’t take credit cards.
If you take both credit and debit.
You can require all debit card in the U.S. to be run as a pin transaction except international debit cards. Most business don’t do this to keep from upsetting the customer. Plus some banks charge for pin transactions.
Credit cards do have pin but that for a cash advances. Most people would not want to make a purchase by taking cash out. Most cards have a lower limit for cash advances.