A Tale Of Chip and PIN

I went in to my local grocery store tonight and went to use my credit card and poof – something new.

A couple of details first.

My credit card is actually a Visa logoed debit card meaning that, in theory, you should be able to use it as a debit or credit card.  Debit with a PIN, credit with a signature.

The store, King Soopers, a subsidiary of Kroger, the mega- supermarket chain, just upgraded their point of sale terminals this weekend to accept chip cards.  A little late, but better late than never.

There is now a hand written sign on the register that says all debit cards now require your PIN.

So why is this of interest?

First, my bank has set up the credit card to be chip and signature and, according to my bank, there is no way for the store to change that to chip and PIN – the card is actually set up differently.  This means that the store – King Soopers in this case – is completing the transaction as a debit card instead of credit card.  Why might they be interested in doing this?  Well, possibly, they think PIN transactions are less likely to be fraudulent.  Also possibly, debit network transactions are dramatically cheaper for the store.  Why do you think, for example, Walmart has made it very obscure for you to use your debit card as a credit card in their stores for years?  Money!

I have written before that chip and PIN is more secure than chip and signature, so why am I whining.

In the interest of full disclosure, I am not sure that I am whining – I am just not sure one way or the other.

My first complaint is that King Soopers is not being transparent with their customers.  For years I have used by Visa logoed debit card as a credit card and now, all of a sudden, with no explanation of what they are doing, they are forcing this to be a debit card transaction.  In terms of my bank account balance, there is no difference, so why do I care?

In part because I don’t trust their security.  Just this part month, Safeway stores discovered skimmers on a number of credit card terminals in their stores, including one near me.  If this happens to King Soopers and they have the card information and the PIN, they could, potentially, empty my bank account.  If someone has my PIN, is the bank going to say that it must have been me that withdrew the money from the ATM?  It could be a fight.

Next, there are very different federal laws regarding recovering from fraudulent transactions between credit and debit cards.  Radically different.  Even if the bank says that they will treat them the same, the LAW is very different.  The law favors credit cards,

SO what I told King Soopers is that, for the moment, I have decided not to shop there any more.  In part this is my way to vote on the lack of transparency.

Obviously, if I needed to shop there, I can pay cash.  There is an ATM in every grocery store if I don’t have cash.

I can also use a true credit card – they can’t force that to be a debit card – although I have not tested that, I am pretty sure that is true.

I may change my mind at some point in the future.  Right now, I am writing this to make sure that people ARE educated and understand what the situation is.  Most people are not as paranoid as me and won’t consider this to be a problem.  Who knows – maybe they are right.

5 thoughts on “A Tale Of Chip and PIN”

  1. Thanks for the article, I have exactly the same issue. I was at King Soopers today and they required a PIN for my transaction with my debit/Visa card. I left the groceries behind.

    I have the same issue with this process as the writer. Since ATM machines started popping up back in the eighties, I have always seen the PIN as the one piece of the card security model that belongs to the consumer. As long as you keep it to yourself, the criminal can only attempt to use it as credit, they cannot use it for debit/ATM access. If we are forced to present the PIN at every payment station, that protection is gone.

  2. I am livid – there was not a sign at my King Soopers. Furthermore the manager had the nerve to look me in the eye and state from now on all stores (not just King Soopers) would be doing this! Really I said because I have never had a problem at any other store, gas station or restaurant. Then I asked what about credit cards (like Capital One – Amex…) He said on those too, you will just have to contact your
    credit card company and get a PIN! I said no I just need to shop somewhere else grrr!

    1. First of all I feel your pain.

      But the manager is wrong.

      Credit cards will NOT require a PIN. In fact, I have tested this at more than one King Soopers and I did not need a PIN.

      Also, gas stations have a different deadline regarding converting their pumps to chip and PIN compatible readers. That won’t happen until 2017.

      Here is what is actually happening There are two different ways that you can process a payment card – either through the credit card network or the debit card network. The FEE that the merchant pays to process the transaction is based on which network they use. The credit card network charges a fixed fee plus a percentage of the transaction amount. The debit card network charges only a fixed fee, no matter the size of the transaction.

      Credit cards can ONLY be processed on the credit card network.

      Debit cards can be processed on either the credit card or debit card network.

      From the merchant’s standpoint, they would prefer that you use your Mastercard or Visa logo debit card as a debit card rather than a credit card since it costs them less money if you do that. Walmart has been not so subtley doing this for years by hiding the option to use a debit card as a credit card. It’s there, but you have to know how to find it.

      Almost always, debit cards processed through the debit card network require the use of a PIN.

      It appears, although King Soopers has not fessed up to this, that King Soopers has decided to force its customers to use debit cards ONLY as debit cards so that they save money. Previously, they gave you a choice. No more.

      So, you have a couple of choices. 1 – use a credit card. 2- use cash. 3- use a gift card. Even if they require a PIN (and I haven’t tested that, but I will), that PIN can be made to be different than your ATM PIN. 4 – Use your debit card with a PIN.

      I do agree with you that I am not fond of option 4 and I think King Soopers did a lousy job of communicating.

      Regarding all stores doing this – THIS IS JUST FALSE. Each store gets to decide how they want to handle payment cards. King Soopers is the only store that I shop in that chose this option. If you don’t like their choice, vote with your feet and shop elsewhere.


  3. Same problem and the same solution for me – my local Albertson’s isn’t as big as the King Soopers, but I will be shopping there as much as I can.

    I had originally been giving KS the benefit of the doubt by assuming they hadn’t finished the credit side of a debit/credit card, but that was a stretch to begin with.

    Also, I’m sure I’m not the only one who hasn’t used their PIN in ages and doesn’t know what it is anymore.

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