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PIN numbers for debit cards?

Published (4/29/2010)
By Nick Busse
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Minnesotans would have to enter a personal identification number (PIN) instead of signing a receipt when using a debit or check card, under a bill sponsored by Rep. Joe Atkins (DFL-Inver Grove Heights).

Retailers say it could save consumers money.

“There is a cost to processing credit cards and debit cards,” said Randy Thompson, general counsel for the Minnesota Service Station Association.

Thompson said banks charge retailers “tens of billions of dollars” every year to process credit and debit card transactions; retailers, in turn, recoup those costs by charging higher prices to consumers.

HF3623 would switch Minnesota from a system that requires debit card users to sign receipts — as with a credit card — to one that requires them to enter their PIN numbers into a keypad. Thompson and other supporters say the PIN-based debit card system would cost retailers less money, because processing PIN-based transactions is cheaper.

The House Commerce and Labor Committee held an informational hearing on the bill April 27. Atkins said he doesn’t expect action on the issue this year, but he expects more attention will be paid to it in the future.

Banks and other financial institutions oppose the bill, arguing the current system is more secure. They point to a provision in the bill that would exempt Minnesota retailers from having to comply with security standards for credit and debit cards.

Joe Witt, president and CEO of the Minnesota Bankers Association, argues the bill could expose consumers to increased risk of identity theft or fraud.

“These standards are in place for a very good reason. We’ve seen a lot of data breaches; we’ve seen the damage that can happen from it. A lot of those data breaches were at retailers,” Witt said.

He added that the higher costs in the current system go to pay for technologies that increase security and reliability in processing transactions.

A companion, SF3213, sponsored by Sen. Dan Sparks (DFL-Austin), awaits action by the Senate Commerce and Consumer Protection Committee.

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