April 30, 2012
Why are my credit and debit cards still embossed?
Having spent a number of years in the payments business focused on cards, I commonly receive questions from family and friends related to cards. I would be a wealthy individual if I received a dollar for every time someone asked me, "When am I going to get a card with a chip in it?" Although I am not able to offer any specifics on timing, I do feel confident in telling them that they are coming within a given time frame.
This past weekend, a neighbor out for a leisurely weekend stroll stopped me and asked, "Why do I still have an embossed credit card?" I must admit that I was a bit stumped by the question and couldn't offer him a reasonable explanation. I could not recall the last time that I had seen a "knuckle buster" machine used to make an imprint of a card. And who hasn't struggled trying to read your embossed card numbers and expiration date to make an Internet or phone transaction? Still pondering the question a few hours later, I did recall the food delivery driver who brought the old carbon paper slip, along with our food, to the door and used a writing pen to make an imprint of my card. I am quite certain that over the past five years, this was the only time an imprint of my card has been made—and this includes using my cards for purchases in taxis, from food truck vendors, and in developing countries such as Honduras, and remote Caribbean islands.
One answer to the need for embossed cards lies with network chargeback rules. Both MasterCard and Visa subject merchants to chargebacks on key-entered card-present transactions with no manual imprint. A key-entered transaction takes place when the terminal cannot read a card's magnetic stripe, so the vendor has to input the card number and expiration date. Even when this occurs, I am not so sure merchants follow the network's chargeback procedures. Do you remember a merchant making an imprint of your card in the rare instance your card information had to be manually keyed? Maybe it's time for the card networks to re-visit their chargeback procedures.
Another reason for maintaining embossed cards is that apparently some merchants, both domestically and internationally, still rely on imprints for transactions. I do not think that I am alone when it comes to my extremely limited experience with manual card imprints over the past five to even 10 years. With highly reliable telecommunication systems and the ever-growing number of mobile card readers, perhaps the networks should require all transactions to be swiped (for mag stripe cards), dipped (for EMV chip cards), or tapped (for contactless cards).
So while I have several answers to my neighbor's question, I am not convinced any of them are reasonable explanations in this day and age. Cards are embossed primarily for legacy reasons, and this embossing is irrelevant for most transactions. Maybe as issuers transition to chip-embedded cards (hopefully), they could subsequently transition away from embossed cards. In a recent American Banker article, Andrew Kahr discussed one good reason to change to nonembossed cards, and that would be to allow banks to instantly issue cards. I am quite certain my eyes would appreciate that change!
By Douglas A. King, payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
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