California Groups Ask Governor Jerry Brown to Require Chip and PIN Technology

Letter calls for an executive order that would mirror the federal rule, protect state transactions

Aug 07, 2015, 15:42 ET from California Retailers Association

SACRAMENTO, Calif., Aug. 7, 2015 /PRNewswire/ -- The California Retailers Association, Latino Consumer Federation, and California Grocers Association sent a letter to California Governor Jerry Brown urging him to adopt a global credit card standard known as chip and PIN for all transactions that involve the state government. The groups believe that working with the Governor's office to put forward a California solution that closely mirrors President Barack Obama's BuySecure Initiative implemented in October 2014, would bolster security for transactions that involve state government.

"California has long been a pioneer in advancing policies that shape the economy and the rest of the country," the letter reads. "This is another opportunity to demonstrate our leadership. Mandating chip and PIN technology for state cards like the ones in the Cal-Card Program would not only secure more transactions that take place, but it would also better protect state finances."

The letter argues that decisive action by Governor Brown's Administration would also encourage implementation of chip and PIN across California and the country. Chip and PIN cards are widely used around the world with the exception of the United States – the only G20 nation that has not adopted the technology and instead continues to rely on the outdated magnetic stripe and signature payment cards. "In order to move beyond the outdated and fraud-prone magnetic stripe credit cards we are all accustomed to, credit card issuers have started rolling-out new credit cards that contain an embedded microchip," the letter states.

"While chip-enabled cards are certainly a step in the right direction," Bill Dombrowski, President and CEO of the California Retailers Association explained, "they are merely a half-measure since the cards continue to rely on signatures for verifying transactions – an outdated security measure that thieves can easily forge."

The PIN (personal identification number) in place of a signature adds an important second layer of security during point-of-sale transactions, according to the signers. "This technology has contributed to exponential reductions in fraudulent activity," said California Grocers Association President Ronald Fong. "The United Kingdom saw a nearly 70 percent decline in in-store fraud when they established chip and PIN as the standard more than a decade ago. Yet we are bound by big banks and credit card companies' self-serving unwillingness to invest in this more secure payment system. They continue to cut corners while consumers, retailers, and small businesses alike remain vulnerable to fraud."

Michael Bustamante, Founder and Board Chair of the Latino Consumer Federation voiced his particular concern in protecting California's Latino community. "Latinos and all American consumers deserve the strongest safeguards possible. The Governor's support for chip and PIN technology will send a clear and important message to the credit card industry to invest and deploy chip and PIN cards for Californians and consumers across the country."

President Obama took an important step last year when he issued an Executive Order requiring chip and PIN technology for all federally-issued cards, a strong signal from both the Administration as well as security experts that chip and PIN should be the national standard.

To read the full letter, please visit: Joint Letter Urging Governor Brown to Adopt Chip and PIN Technology for State Credit Card Transactions

Contact: Shea DeAnda McCaslin
(916) 552-2390


SOURCE California Retailers Association