With the introduction of credit cards with an embedded security chip, the banking and retailing industries are battling over issues of security, fraud and the cost of adoption. For years, European banks have issued credit cards with both the chip and a PIN; U.S. banks are foregoing the PIN and relying solely on the chip and an in-person signature. Retailers argue they are absorbing the high cost of adopting the chip technology and paying interchange fees, without reaping any of the benefits of lower fraud.

According to The New York Times, last year, large retailers paid “billions of dollars upgrading their equipment,” and the average small convenience store — which makes $46,000 in annual profit — paid $26,000 to upgrade its gas pumps and point-of-sale terminals. These same merchants paid $61 billion in interchange fees last year compared with $30 billion in fraud losses.

National Association of Convenience Stores board member Jared Scheeler complains that retailers will end up bearing “far more than 100 percent of the cost of fraud,” due to these expenses.

Two U.S. attorneys general — Sam Olens of Georgia and George Jepsen of Connecticut — sent a letter to their colleagues in October urging the top prosecutors in other states to push Visa, MasterCard, JPMorgan Chase, Bank of America and other institutions to adopt the chip-and-PIN technology. Recently, Olens withdrew his name from the letter.

Although security specialists agree that chip-and-PIN is safer, banks are arguing to the contrary. The Retail Industry Leaders Association, a trade group, has hired two former attorneys general — Martha Coakley of Massachusetts and Nebraska’s Jon Bruning — as consultants.

“Given the clear consumer benefits of chip and PIN, why are banks hesitating to require both?” Coakley asked in an opinion article she co-wrote. “The truth is that, for banks and card networks, the status quo is lucrative; they don’t want to change.”