In May, I published an article “Are Americans too dumb for Credit Card PINs?” pointing out the absurdity of U.S. card network rules requiring a merchant to accept a cardholder signature as authentication on an EMV-chip enabled card transaction, rather than requiring the customer to enter a PIN like 80+ other countries.

By forcing merchants to adopt this less secure authentication method, the card networks practically guarantee higher merchant fraud costs and increased interchange fees for non-PIN based debit transactions.  An increasing number of merchants are resorting to litigation in an attempt to influence the card networks to change their policies.

Kroger is the latest to sue Visa over the rule, after Visa informed the merchant that its point of sale terminals did not comply with the signature rule.  Kroger has apparently been fined $7 million by Visa for noncompliance with Visa’s mandate.  Wal-Mart filed a similar lawsuit in May, and Home Depot sued both MasterCard and Visa over the policy last week.

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