July 16, 2009
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News: Debit Card Security Rules Worrisome
Don't be surprised one day when you go to pay for gas at the pump and you're told you must pay by cash or credit card only and that if you wish to use your debit card you'll need to go inside the store. A new security regulation set down by the Payment Card Industry Data Security Council (PCI) recommends that gas stations upgrade their pumps to include a personal identification number (PIN) processor. Although only recommended by the PCI as an added measure in protecting the security of consumer information, Visa one of the world's largest credit card networks has made it a mandatory rule. They have set a deadline of July 1, 2010, for all gas stations to comply. The measure is expected to be a very costly move for retailers which will most likely filter down to the credit card consumer.
Gas stations are in an uproar over the new standard and say it will cost them thousands of dollars to perform the upgrade. The cost is estimated at approximately $3,000 per pump. For some companies with several gas stations and each one maintaining a number of pumps the cost could put many in the hole. Most gas stations operate on low profit margins already and have seen a sharp decline in credit card spending. Consumers are relying more on debit card payment. Recent studies indicate that consumers are using debit cards in over 60% of retail transactions. With gas prices already high and rising, consumers will be the next to feel the pain. Visa, on the other hand, says that if the retailers don't do the upgrade, they will have to cease accepting debit cards and offer credit card only.
Advocates for gas retailers say the rule is unfair and that Visa should help to subsidize the cost of installing the new pumps. They also say it's unfair for those consumers who prefer using their debit card over credit card and will find themselves having to go into the store to pay by debit. Consumer protection advocates also say not having the option to pay by debit at the pump would only be encouraging consumers to increase their debt. One can't help but wonder if Visa's motives are as honorable as they first appear.