Comment by jltsiren
1 day ago
Chip and signature, which often means just the chip without further authentication.
EMV has multiple options. Many countries (including the US) chose the signature option for credit cards for convenience and use PINs only with debit cards. Before contactless payment apps became common, that was a major source of friction when using American credit cards in Europe.
I'd argue we picked it for legacy reasons - Americans are not used to the chip/pin concept, and adopted EMV very late because of a variety of legacy reasons (massive installed base of mag stripe equipment, and systems to deal with the inherent slightly higher fraud).
No the US stuck with signature for profit and cultural reasons. Europe also had a huge install of mag stripe equipment, and has the same fraud systems, what else do you think Europe was using before EMV was developed?
But Chip-and-PIN makes using credit cards marginally less convenient, and forces people to authenticate themselves to perform transactions, unlike swipes and signatures, something that many Americans don't like. The US is happy with crazy high fraud rates, and crazy high interchange rates (fees for using credit cards). Those interchange rates also fund all the fancy points and rewards programs in the US, and primarily are paid for by the poorest in society (who can't access those programs, but are still paying the interchange rates). Plus high interchange rates mean more money for banks and the card networks themselves.
The EU on the other hand capped interchange rates, so either banks had to get fraud under control, or pay for fraud out of their own pockets. I'll give you two guess which route they chose.
legacy reasons = cultural reasons
Americans are not used to the pin concept.
The legacy reasons are part of why we waited so long to adopt EMV - my belief is that the US had much higher density of credit card adoption which significantly delayed EMV/Chip adoption - to give you an idea, even in the mid 90's a place that didnt take a credit card was an exception rather than common.
I dont disagree with you about interchange rates etc - we should cap them - but as a high earner I'm also going to maximize what I can from that system while I can ;-)