Chase Bank has recently reached out to their converted WAMU customers who are receiving a newly branded debit card asking them to "always select 'credit'" when paying for their debit card transactions, stating that the transaction is actually safer than entering a PIN.
The slightly confusing message has not gone unnoticed by industry experts who have come out on both sides of the argument around safety. According to an article in the April 21 edition of American Banker, consultants from Gartner and Aite believe that the PIN provides an added level of security, and that the Chase message may be driven more by the opportunity to generate the higher interchange income associated with a signature based transaction as opposed to a PIN transaction.
Alternatively, Marite Ferrero, CTO of France's CardSwitch Technology, stated on April 22 that he believes the pen is mightier (and safer) than the PIN since fraudsters who skim a customer's mag stripe can use the captured PIN to perform non-personal transactions at an ATM and online.
Whether the Chase message resonates with customers as much as the significant incentives and rewards offered by Chase and most other large and small banks for signature based transactions remains to be seen. From what I have heard in my travels over the past couple months, however, the Summer and Fall spending seasons will most likely see a significant uptick in mass media and direct marketing promotions to get customers to change their debit card transaction habits. With Reg E expected to negatively impact fee income, almost all institutions will need to find new ways to cover the cost of checking and related services.