What are Chip and PIN Credit Cards?
July 2, 2009
If you’re like many consumers, you’re familiar with traditional credit cards and their transaction process. You have a card with a magnetic strip that stores your account data. When you make a purchase you swipe that magnetic strip through a card reader. You then sign a credit card slip or receipt, and the cashier compares your signature to that on the back of your credit card. Now credit cards are changing for the better through chip and PIN technology.
What is chip and PIN?
Unlike traditional credit cards, your data isn’t stored on a magnetic strip with chip and PIN cards. Instead, the credit card contains a microchip with your account information. These chips are read by newer chip-compliant merchant terminals. Rather than signing for a purchase, you would enter a four digit PIN number (just as you do when you use a debit card).
Why move to chip and PIN?
Chip and PIN credit cards (like the Commonwealth Bank Awards credit card) offer two primary benefits–security and convenience. A thief cannot use a stolen chip and PIN credit card if they don’t have the PIN, whereas they could more easily fake a signature found on the back of the credit card. The newer chip and PIN cards can also be faster for you to use as a consumer – it’s easier to enter those four numbers than to get a printed slip, sign it, and wait for the cashier to verify the signature.
Is chip and PIN technology safer for online purchases?
While chip and PIN credit cards are designed to offer more security in point-of-sale purchases, they won’t impact transactions where your credit card isn’t physically required to be present, such as online and telephone payments. Because of that fact, you can’t count on the chip and PIN technology to protect you if your cards are stolen. It’s as important as ever to report lost or stolen cards to your credit card company immediately.
Chip and PIN technology isn’t used in all cards yet, but it’s increasing in popularity globally. The cards may be more convenient and they may have added security features for some types of purchases, but you still have to protect your cards and your personal information. Never write down your PIN (or save it in your mobile phone). In the end it’s still up to you to avoid credit card fraud.
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One thing that people, and the media overloook is that chip and pin technology is not there to protect the consumer. It is there to protect the banks.
You state that it’s easy to copy a signiture, I doubt this is true. The beauty of a PIN number, for the banks, is that the user has no way to prove it wan’t them that used the pin, whereas with the signiture system, if disputed transactions took place, the user just had to request copies of the signed slips, which were usually non-existant, or easily identified as forgeries.
While it should be somewhat difficult to find out a pin (not true actually, as pin-hole cameras and such are being used for this purpose) even though you know the person’s name, it takes good samples and a lot of patience to copy a signiture with reasonable accuracy.
While the initiative won’t necessarily improve your credit card’s safety, Pen or PIN Project Manager Simon Greig says it will speed up transaction time and give consumers more choice.
The point with signing is that if someone steals your card they can have a go at signing for transactions with the card. In most shops people rarely check the signuature to see if it matches or not. If a card is PIN only I believe that it does make it harder for thiefs to use the card.