PCI – Why it lags behind in North America

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For those of you who aren’t very involved in the banking industry, PCI stands for Payment Card Industry. This is the framework by which payment cards (Visa, Mastercard, Interac, etc.) are governed. The  Payment Card Industry Security Standards Council created the Payment Card Industry Data Security Standard, or PCI DSS for short. This is an industry standard which must be followed by manufacturers and organizations looking to process and collect payment card information.

Now, PCI shouldn’t be confused with government legislation. PCI standards can differ from country to country. Most professionals mistakenly believe that PCI is the reason why payment card technology sometimes gets stifled. This is really not the case.

Asia is so far ahead of the rest of the world when it comes to payment card processing. In South Korea, you can pay for items at vending machines with your cell phone. This is not something new either, it’s been around for almost a decade. Europeans have been able to pay with chipped credit and debit cards for years now. Canadians have been able to use NFC (Near Field Communication) embedded into their credit and debit cards for a while now.

 

 
So why are we so far behind places like South Korea ? Well, part of it has to do with regulation. In Canada, we have legislated requirements (albeit not as strong as Asia or Europe) for the payment card industry to adopt new technologies. For example, when the microchip credit and debit cards became available, merchant account providers (the companies you sign up with and get your card processing machine from) were required to move their clients onto chip-enabled terminals within (if I remember correctly), 2 years. When NFC came out, same story (that’s actually being rolled out en-masse right now as we speak (I received my new terminal last week)). In the United States, there doesn’t seem to be that drive for legislators to force the banking industry to adopt and move onto these new technologies. It’s my opinion that it has to do with the segmented banking system in the USA, and how many different organizations exist. In Canada, we have 5 major national banks. Sure there are smaller credit unions and this and that, but the majority of Canadian individuals and businesses are dealing with the 5 major banks. This makes it easier to force changes onto those banks, as opposed to the USA, where Wikipedia lists 6,799 FDIC-insured commercial banks.

In any case and whatever the reason, the fact is that North America, and the United States in particular, is really lagging behind in the payment card industry. The technology is moving so quickly, yet many retailers in the USA are still using the old ‘swipe-n-sign’ method. With major financial hacks taking place, like the Target hack that leaked 40 million or more payment cards, hopefully American legislators wake up and realize that they need to guide (read: force) the financial sector to upgrade their technology and adopt new security standards, most of which have been around for quite some time now.

Author

Martin Lehner

Martin Lehner is an technology professional working for an IT services firm in Whitehorse, Yukon (Canada). He has been working in the technology field for over a decade. With a degree in Business Admin and numerous industry certifications, Martin leads a team of IT professionals that provide third party support for clients. Originally starting a company to offer web development services, Martin quickly realized that clients wanted the entire spectrum of technology services. When Martin is not at work (which is not often, since his company offers 24/7 support), he is busy at home spending time with his family.

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1 Comment

  1. Aaron Whitcomb June 25, 2014 at 8:18 pm

    In Japan, we use Payment Cards, SUICA or PASMO, to purchase public transportation just about anything from vending machines and convenient stores as long as it is within close proximity of a train station. In essence, the denser ther population the faster the adoption of these “convenient” technologies.

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