Wal-Mart, the largest retailer in the world, will be the first American retailer to offer smartcard-based techonology at all payment terminals in its domestic stores, according to a recent report released at a smartcard conference. The signature-free credit card terminals use Chip and Pin technology and are used worldwide but not commonly found in the United States. Most smartcards in use today incorporate the Europay MasterCard Visa (EMV) smartcard standard from the major credit card companies.

The cost of changing over to the new system has been the major reason for the holdout of U.S. companies. But with Europe and most major economies using smartcards, fraud has begun to migrate to the U.S. with magnetic strip cards being an easy target. Consumers may also be finding it difficult to use their current cards outside the country, said Ray Wizbowski, Director of Marketing Strategy at Gemalto NV, an Amsterdam smartcard vendor located in Austin.

Although there are no one-hundred percent guarantees in any of the current technologlies, smartcards are considered more secure than magnetic strip cards, with cardholders using a personal identification number (PIN) to authorize payment. But upgrading to the new technology will mean replacing existing credit card terminals for ones that accept smartcard transactions. Financial institutions and banks will need to reissue cards that have embedded microprocessors for data storage, eliminating the magnetic strip.

The action is expected to have an impact on the payment industry with other merchants and card issuers looking to adopt the technology. Wal-Mart’s plan represents “very positive news for the industry and consumers as a whole,” Wizbowski said. “Consumers are going to have a secure payment product available to them,” relatively quickly, he said.

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