News Column

M&T joins movement toward higher-security credit cards

July 10, 2014

By Matt Glynn, The Buffalo News, N.Y.

July 10--The way we typically use our credit cards -- swipe the stripe, then sign a receipt or screen -- is due for an upgrade.

Experts say those types of cards lack the best technology available to combat fraud. But changes are on the way.

M&T Bank is joining the ranks of U.S. financial institutions rolling out credit cards with stronger security features. It has introduced consumer and commercial credit cards enhanced with computer chips and equipped with personal identification numbers, or PINs.

The chip-and-PIN features are considered superior for safeguarding customers' data. And without the upgraded features, Americans traveling to places like Europe might discover their credit cards won't work in some places.

M&T first issued its new credit cards to companies with a lot of international travelers, and is extending the rollout to its entire commercial customer base, said Chet Bridger, an M&T spokesman. The bank just this week introduced consumer credit cards with those features, and is issuing them to customers as they sign up for cards, as their current cards are replaced, or when customers request them.

M&T's new cards also have the traditional magnetic stripes, so they can be used for transactions with merchants who don't have the technology to handle chip-enhanced cards, as well.

Jarod Haslinger, M&T's administrative vice president for direct lending, said the bank has been working on introducing these cards for some time. "The industry as a whole is just starting to wrap its arms around how to do this in the U.S.," he said.

The upgraded card technology is especially useful for people who travel to Canada or overseas, where these chip cards are more commonly used, he said.

Mary Rajczak, M&T vice president and credit card product manager, said the chip is an advancement in technology for fighting fraud, an improvement that benefits consumers.

First Niagara Financial Group said adding chips on its own credit cards "is very much on our radar for both consumer and business credit cards. We anticipate piloting and rolling out this feature in 2015."

Matt Schulz, a senior industry analyst at, said it is about time for U.S. financial institutions and businesses to catch up. "It's coming," he said. "It's just coming a little more slowly than some would have liked."

Schulz said some of the new cards that U.S. financial institutions are rolling out are "kind of the halfway point": they are enhanced with computer chips, but lack PINs, meaning a customer's signature is still a requirement.

The chip makes it harder for a counterfeiter to physically replicate a card, so that is a step forward, he said. "The bigger thing is, any time a signature is involved, it's not as secure as a PIN." In other words, it is easier for a thief to forge a signature than to figure out a customer's PIN.

Customers carrying chip-enhanced cards without PINs might run into problems internationally, Schulz said.

That has happened to Lew Mandell on his business trips to Europe. His traditional credit card won't work at an Amsterdam train ticket kiosk, so he gets stuck in line buying tickets at the window.

Mandell, professor emeritus of finance and managerial economics in the University at Buffalo School of Management, said many U.S. financial institutions have been slow to introduce chip-enhanced credit cards because of the cost involved. But last year's Target data breach has created momentum for change, and he sees no reason U.S. financial institutions shouldn't get on board.

"We're not talking about an unknown technology," he said.

Schulz predicts 2015 will be a breakthrough year for the switch to the more-advanced credit cards in the U.S. Major credit card companies directed merchants to be prepared for the change by October 2015, or else they might have to assume more liability in fraud cases, he said.



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Source: Buffalo News (NY)

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