The US has literally thousands of small regional banks across 50 fairly independent states.
Rolling out major new technologies in that environment is far far harder.
Setting that aside, you missed the "deregulated" part.
As I understand it (and I grant my understanding is pretty cursory) Germany has a much stronger central regulating body, and is subject to overall EU regulations as well.
The US has multiple regional banking authorities and a ton of responsibility is delegated to the states, and in general government intervention is seen as a last resort.
So it's both structural and cultural.
Still, the absolute number itself seems to be not really the issue here. (I assume the number of US banks has similarly declined in the US, as fusions reduce cost.)
> Setting that aside, you missed the "deregulated" part.
Yeah, that part I don't object to.
We really don't have any microbanks that need to roll out their own tech for everything - most are just part of the larger banks, and get all the infrastructure provided for them.
The problem isn't the Chip and PIN itself, although it has been implemented less securely than it could be. The problem, as you point out, is that the liability for fraud has been shifted in law to the card holder, and that is what I objected to. See https://www.chipandspin.co.uk/ for more.
Also, we're still hearing stories about merchants in the US starting to accept Apple Pay, whereas it worked fine in almost every retailer in Canada the day it was available - even though it wasn't available in Canada for a long time, American visitors (or Canadians with American credit cards) could use Apple Pay on launch day at any retailer that supported tap-to-pay, which was easily most of them.
Tax fraud? I've never seen a card reader in a restaurant (here in europe) where they couldn't either enter a completely arbitrary amount to pay, or add a tip.
It’s a network effect thing. Because tap to pay wasn’t supported by the POS vendors US consumers did not get much improvement in experience because of it, so there wasn’t demand from merchants. With Apple Pay there is a huge improvement for consumers (not having to carry the credit card) it has finally forced merchants and their supporting POS vendors to support it.
Between that and the disruption in the POS market the iPad (and similar devices) brought, POS vendors have had to become more flexible.
I used to work in PoS industry.
This tech is new-ish to the US but not to the rest of the first-world. 15 years ago, paying with a CC @ the table was common in Europe, but the terminal could ONLY do payments. The devices that have been rolling out to the US are more like android tablets in that they can run the order taking half of it, too. Selling hardware to a restaurant is tricky and "oh, no, this only allows you to move the payment portion to the table; staff still have to go to central spot to find a table that can accommodate guests and place their order" was basically a non-starter. The sales pitch is a lot easier now that everything can be done table-side.
I don't go to restaurants anymore. Too much pressure.
I do know that some restaurant owners are removing these things. They do not want to look like Olive Garden :)
But it really depends on a restaurant: is it high end, type of food / drinks, it is a date place, etc.
Majority of restaurant is all about experience and event payment system should match that experience.
I'm in the UK. I go to many high-end restaurants, cocktail bars, etc. Portable card terminals are essentially universal in these places. The fact it's the same everywhere is a feature, not a bug.
It's quick. Your card never leaves your sight. No pen is required. Payments up to £100 can be done using contactless on a physical card. Even higher amounts with smartphones/smart watches. Tipping is often integrated into the terminal where tipping is common. It's rare to have to put the card into the terminal.
I don't think it detracts from the experience. On the contrary, I think it streamlines the bit between being finished and wanting to leave:
"Please can I have the bill and a card machine, please".
They’re almost universal at this point to the extent that not to have one would be unusual.
Where you live maybe.
In Japan, you don't pay at the table, you get up when leaving and pay at the exit. If you're at a high-end establishment entertaining guests, this also leaves you the opportunity to "go to the restroom" late in the dinner and pay ahead of time so that the "mess" of payments is completely forgotten.
It also means waiters don't need to run around the place with cards/readers/cash, you don't need to fumble when you left your wallet in your coat that's been hung up, don't need to squint to read receipts in the dim mood lighting in the eating area, etc etc.
Some (well, one maybe) restaurants near me are like this but it is uncommon. Ram's Horn comes to mind.
Europe seems to be shifting the burden of fraud prevention onto customers with methods like SMS notifications and pins. In contrast, in the U.S., banks and businesses are primarily responsible for dealing with fraud.
The main difference is that, in Europe, debit cards are often used in the same way as a CC - except they are just a direct pipe to one's bank, and once the money comes down the pipe there is no easy way to push it back up.
It’s easy enough to get your money back when something goes wrong while being less open to abuse.
In terms of PPP someone should look it up (on mobile)
I suspect that in the US CC processors are incentivized to increase their processing fees to cover the cost of fraud instead of building features to prevent it because they can and it's easier than building features. Businesses are incentivized to increase prices to cover the cost of fraud (and CC processing costs) since processors offer such poor tooling to prevent it.
In the US the burden of fraud prevention is squarely on the honest consumer's wallet.
Here's how much of a "burden" that is: you hold your ATM card next to the terminal. Done. Paid. Every once in a while (based on a configurable max per week) it will prompt for a PIN. Which you enter in 5 secs. That would be 1 in 10 payments.
Online payment: scan payment QR with phone, which takes me to my banking app. Authentication is FaceID, TouchID or PIN. Then you click "Yes". Done.
Both methods are highly secure, require no or minimal input and are extremely fast.
PSD2 directive intruduced a lot of novelties, which no one at the time had (and very few do, not even US). For instance, specific to this situation - remote payments above 30 eur must be SCA (strong customer authentication, similar to 2FA, but more elaborate) verified (small value exception from PSD2 RTS). Also, banks must have both real time and post-time transaction monitoring in place, i.e. they must have systems to detect and prevent such fraudulent attemtps. There literally tens if not hundreds of fraud fighting measures in PSD2, which all banks (both acquirer and issuer) must come mply with. I could go on and on (not the place and format).
Frankly, it's utterly unbelievable that this kind of thing could happen without anyone (either acquirer or issuer) intervenining. Not what could (should) happen here in Europe.
I pointed out a handful of ways the US are lagging far behind in banking.
How can they possibly be leading the way?
They’re stuck with a horribly outdated system that harms small businesses and exposes users to significantly higher levels of fraud.
It’s bizarre that so many people accept credit card fraud as just the way things are.
We do use chip-and-PIN on most debit cards, but even that can be bypassed on 99% of terminals to fall back to chip-and-signature.
With a UK card pretty much any transaction I do online requires me to Auth it in app.
I even found I had to do it recently for things like car hire, and those websites are generally just wrappers around local company searches (though higher sums overall).
"ahead" and "behind" halt thinking, and turn the entire topic into some kind of number-line position. It is not. This is complex and actors on both sides of the Atlantic are playing in bad faith to exploit changes. Second you ignore the roles involved. Mid-20s person with steady job is a smaller and smaller part of the system-in-fact, for many reasons. Some people say that working 20-somethings are abused and disenfranchised, including in the EU and elsewhere.
Maybe, maybe not, but this is a very simplistic way of looking at it. If credit card fraud is responsible for X% of total charges, they can spend effort to deal with it, OR they can simply not deal with it and keeping the transactions going while eating the cost, they may be able to serve Y% more customers where Y > X and thus end up with more profit in the long run.
This works for a lot of businesses in America because the sheer scale is massive (take McDonalds for example, they would probably be better off processing their lunch rush quickly due to the margins they are making rather than take even 1 second to verify there is no fraud). This may not work in Europe, but IMO you're missing an entire dimension when analyzing the true costs.
If the fraud/benefit scale ever tipped away from favoring the companies, I think we would see all these major fraud prevention mechanisms kick in almost immediately in the US.
With that said, I can’t remember the last time I saw a POS terminal that wasn’t contactless.
More often than not I’ll go out with nothing more than my phone knowing that regardless of where I end up, I’ll be able to pay.
Features like SCA protect consumers and businesses alike.
That’s the micro/local view, and any rational company in the US will do something close to that. There is no local incentive to set the “fraud/friction” to anything other than their competitors.
On the macro level though, if the dial is moved for everyone (i.e. by regulation; the card schemes have tried to make this happen via incentives in the form of the liability shift, but it still wasn’t enough), there’s a chance for increased total efficiency.
The cool thing is that Europe is running this experiment currently – let’s see how it goes.
Onto the vendor, not the customer. The customer can chargeback anything instantly, and the vendor is on the hook for the fraud.
It's intentional, so the banks and payment processors can make more profits. By making it easier for customers to chargeback, they incentivize customers to buy more stuff, by getting the customer to feel more comfortable charging everywhere. Charging more stuff makes payment processors more money.
Chip and PIN doesn't work for internet payment.
Bank transfers don't work well internationally.
It is trivial to turn on AVS (address verification) and CVV, but it can result in more declined-yet-legitimate transactions. Sometimes that outweighs the fraud risk that these catch.
The responsibility for fraud is pushed to the merchant, not the customer. Yes, customers pay higher prices because merchant fraud gets passed on eventually, but only in the sense that all fraud costs get passed on to consumers eventually.
I would say it’s not worse than most of the world though. Much of the world is rampant with fraud borne entirely by the consumer. For instance QR based bank transfers are popular in much of the world outside the western developed world. Fraud is insanely rampant but the ease and utility vs cash makes it acceptable. Transactions costs are near or actually zero and there’s no POS infrastructure. But people meticulously check their transactions because theft is so rampant. The banks and governments seem unconcerned though.
As such I put the US somewhere in the midpoint globally for this space. There are some smaller economies with strong regulatory regimes that do better for sure. There are many more that do much worse. Obviously the goal is the better not the worse, but I think it’s cherry picking to lump the US into being the worst.
- Chip and PIN has been in the UK since 2004 and mandatory since 2006. It wasn't until a decade later that the US caught up.
- Faster Payments allow for instant bank transfers (usually) between any bank account for free. Receiving transfers from clients in US (even with a US Wise bank account) was always a nightmare.
- Since the EU introduced Strong Customer Authentication, most new payments have to be authorised in your mobile banking app or by some other means of 2FA.
- Even before SCA, you'd have to get the Postcode (often digits that mattered) and CVV correct at the very least.
These measures seem like a way of banks shifting the responsibility for fraud onto the customer. In either case though, it's the customer who loses out. In a culture that accepts widespread card fraud, costs increase to offset it.