America’s largest retailer is going after the largest creditor in a fraud swipe battle.
Walmart filed a lawsuit in New York state Supreme Court last week against Visa USA, which the retailer says endangers cardholders with its card-fraud detection system.
Walmart lawyers complain that retailers are required to use what it believes is a faulty system: Visa’s signature verification system for certain debit transactions using chip-enabled cards.
This is a system, Walmart officials allege, that Visa imposes so it can keep certain debit card transactions within its own network “rather than competitor networks of Walmart’s choosing,” according to the Walmart lawsuit.
Nevertheless, Walmart lawyers say their chip-and-PIN security system, which requires customers to enter a personal identification number, is better because it “accords with global best practice for fraud prevention.”
However, Visa says it is offering cardholders both the PIN and the signature options, since that is what many cardholders want.
“We believe Visa’s position creates unacceptable risk to our customers,” said a Walmart spokesman. Visa’s present card network security is prone to “fraud,” and Visa discourages better systems, he added.
A Visa spokeswoman says the fraud detection technology it uses with its chip, or EMV, cards is effective.
“Visa has been focused on encouraging and supporting the adoption of EMV chip technology as quickly and efficiently as possible, so that we can realize the powerful security benefits that the EMV chip provides,” says Stephaine Ericksen, vice president of risk products at Visa.
An association representing retailers sides with Walmart.
“Retailers know that chip-and-PIN cards provide greater security,” according to a Retail Industry Leaders Association statement.