The customer still pays for fraud, one way or the other. So why not aim to prevent fraud in the first place by using a simple and effective second factor to mere possession of the card?
(1) Most people would rather pay the cost of fraud averaged across all accounts than suffer the risk of unlimited fraud against their own account.
(2) Putting the risk on credit card companies highly incentives them to fight fraud. This is ideal because they make the money and they are best positioned to fight it.
(3) Your premise is false to begin with. Higher fraud, like taxes, is payed for by some combination of the customers, the employees, and the owners (though actually it's more complicated than that due to contractual agreements: I believe merchants bear the penalty so we get recursive).
Even when the customer pays exclusively, there's a propagation delay that hits somebody else's wallet in the interim. (E.g., merchants don't raise prices immediately everytime fraud/taxes/wages increase.) It's a mistake to think of this as a mere transitory effect rather than a structural advantage that favors the consumer.
PINs are safer, and less fraud is better. At the end of the day, shifting blame and liability is not going to change anything.
However, using security factors like secrets or updating the withdrawal limit is possibly inconvenient, that's why some people rather not use them and companies are incentivised to just recover the relatively minor losses to fraud in fees.
I guess it comes down to the fact that in some countries people are used to having about five different cards, and in others it's close to one.
((1) is both disingenuous (ignoring sensible withdrawal limits) and mathematically wrong (unlimited fraud spread evenly over all accounts is still unlimited fraud against every account). I guess people would pay more to avoid surprises, but they'd like it even more if there was less fraud.)
(3) The point was more that someone will have to pay for the fraud that is happening. Deriving a structural advantage from not using secrets is far fetched.
argomo|4 years ago
(2) Putting the risk on credit card companies highly incentives them to fight fraud. This is ideal because they make the money and they are best positioned to fight it.
(3) Your premise is false to begin with. Higher fraud, like taxes, is payed for by some combination of the customers, the employees, and the owners (though actually it's more complicated than that due to contractual agreements: I believe merchants bear the penalty so we get recursive).
Even when the customer pays exclusively, there's a propagation delay that hits somebody else's wallet in the interim. (E.g., merchants don't raise prices immediately everytime fraud/taxes/wages increase.) It's a mistake to think of this as a mere transitory effect rather than a structural advantage that favors the consumer.
jmkerr|4 years ago
However, using security factors like secrets or updating the withdrawal limit is possibly inconvenient, that's why some people rather not use them and companies are incentivised to just recover the relatively minor losses to fraud in fees.
I guess it comes down to the fact that in some countries people are used to having about five different cards, and in others it's close to one.
((1) is both disingenuous (ignoring sensible withdrawal limits) and mathematically wrong (unlimited fraud spread evenly over all accounts is still unlimited fraud against every account). I guess people would pay more to avoid surprises, but they'd like it even more if there was less fraud.)
(3) The point was more that someone will have to pay for the fraud that is happening. Deriving a structural advantage from not using secrets is far fetched.
afiori|4 years ago