Merchant Reward for Anti-Skimming?

One of the greatest vulnerabilities to having payment card data stolen has typically been the cashiers, waiters and waitresses who handle card transactions. The teen at the McDonald's counter for example, who swipes your card to ring up your Big Mac and fries. Today, he can hide a wireless swiper in one palm and scan your credit card and transmit the data to a nearby laptop. All of the necessary equipment can be had for under $200 over the Internet including the machine to transfer the stolen card to blank cards, gift cards, etc.

Merchant Reduced Feed

As merchants implement two-factor authentication, where customer receives a request to verify the transaction over a mobile phone, the merchant is in effect reducing their risk exposure. When the customer confirms the transaction, the merchant should not be charged the regular payment interchange fee because the transaction is at a much lower risk class, user confirmed.

Discount Fees Haven't Caught Up

For the most part, anti-skimming measures installed by the merchant to protect the merchant's reputation and provide additional customer security haven't caught up. That is, the merchant doesn't realize a lower discount fee for the transaction. Verified by Visa is one exception. While worth mentioning, my personal experience with Verified by Visa was horrific. While I make purchases frequently online, I could never get Verified by Visa to authenticate me with even simple debit card through credit union. It was as fun as pulling teeth without Novocain. I abandoned the shopping cart and found the item through another vendor.

• How can we have chargebacks on user-verified transactions?
• Should the ACH still hold merchant to return window for Reg E?
• Should Reg E be updated?

Merchant Associations

I hope the merchants, through their associations, push to realize the reduced fees they are entitled to in exchange for increasing security and implementing two-factor systems. I will continue to follow and report on this issue.