In October, the onus shifted from credit card companies to banks and retail businesses in cases of credit fraud — only if companies hadn’t implemented the new chip-and-PIN standard. While the worry of financial losses drove some to move up their compliance timeline, many still rely on the swipe-and-signature process to verify cardholder identity. According to CSO Online, the attorneys general of nine U.S. states have sent a joint letter to some of the biggest financial institutions dragging their feet on implementation in hopes of spurring increased adoption.

The Chip-and-PIN Letter of Intent

In their letter to banks like JPMorgan Chase and Bank of America and issuing agencies such as Capital One and Citigroup, the nine attorneys general argued that existing signature-based authentication was a “less-than-secure standard since signatures can be easily forged or copied or even ignored at the point of sale.” The problem? Banks and other companies are reluctant to make the switch, in part due to the cost required to purchase and install new point-of-sale terminals and partly because they’re worried that customers will jump ship for competitors who still allow signature-only cards.

The nine attorneys general also make the case that both Europe and Canada have largely adopted chip-and-PIN technology, and the U.S. runs the risk of falling behind if companies don’t start issuing these cards in earnest. Motley Fool, meanwhile, pointed out that chip-and-PIN cards are not only harder to steal and replicate, but also harder to defraud even if cards go missing. In other words, this investment is worth the cost over time as fraud opportunities decrease.

Familiar Fraud

According to SC Magazine, the FBI recently issued a warning that despite the introduction of chip cards, credit fraud remains a real risk. Why? Because not all companies have taken equal steps to implement the technology. Some have fully embraced the idea and completely eliminated the use of swipe-and-signature, while others rely on the hybrid nature of many chip cards — which still contain a magnetic stripe. If employees aren’t properly trained or management doesn’t clearly communicate expectations, it’s possible to override chip protocol in favor of swipe alone, which puts companies at risk.

Deborah Baxley of Capgemini Financial Services told SC Magazine there was no way all merchants would make the October deadline; she predicted less than half would be ready for chip-and-PIN. And for companies that didn’t see themselves on the front line of counterfeiting, the reasons to skip the chip seemed to outweigh the benefits. After all, if no fraud occurs, there’s no money to pay back.

Ultimately, there’s a dual-pronged case for the implementation of chip-and-PIN cards. First is the lowered risk of fraud and the avoidance of fault in the event of fraudulent transaction approval. Second is the international argument: Other nations doing business with American companies have no interest in becoming targets of fraud by association if U.S. businesses refuse to improve their security.

Chip-and-PIN offers improved card security but it’s not in the bag yet — companies need to heed the words of the attorneys general and get their payment house in order.