Smart Chip Technology for Retailers: Is an Upgrade in the Cards?


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US based retailers may have noticed that Canada has recently mandated an industry switchover to smart cards. The same holds true for Mexico, as both nations' credit card industries have agreed to fully convert to a more secure chip and PIN payment verification system by 2012 and 2008 respectively. However, implications for American retailers are minimal, and they should not be concerned about an imminently mandated POS refresh.

Chip and PIN 101

The Integrated Chip Card (ICC), more commonly known as Smart or chip and PIN card uses integrated chips combined with a personal identification number that allow consumers to verify their identity through a pin number instead of a signature. The card is intended to:

  • Prevent fraud.
  • Reduce POS transaction time.
  • Reduce charge-backs: charges credited back to consumers that claim charges have been made in error.
  • Reduce the hassle associated with cancelling and reissuing lost and stolen credit cards.

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