When the United States finally embraced EMV, the major card issuers favored chip and signature as the authorization method. However, as security measures to prevent credit card fraud advance, chip and PIN is the natural progression. Below, we discuss each verification method and best practices to prepare for what’s to come.
Chip and Signature Card
Currently, the chip and signature card is the most common method of verification for chip card transactions in the United States. Why? Because it’s so similar to how magstripe credit cards are verified (swipe and signature). It’s what we’re used to. Plus, it’s quicker and more convenient at checkout. The problem is, signatures are easy to forge.
Proponents for chip and signature argued that chip and PIN would overly burdened cardholders, since the average U.S. consumer carries three cards. For the sake of convenience, the less-secure method was adopted.
Chip and PIN vs Chip and Signature
Excluding the United States, countries across the globe have opted for chip and PIN verification. This process is similar to a magstripe debit card transaction, but the card is inserted so the chip technology is read, and the customer is prompted to enter the PIN number before the card is removed.
If you put short-term concerns aside for long-term security, EMV cards with chip and PIN verification are the better option. In the event of a lost or stolen card, PIN verification is more effective at combating fraud because PINs are securely stored in the chip technology.
Consider the United Kingdom’s take on EMV verification. In 2006 chip and PIN was implemented to fight fraud due to lost, stolen and counterfeit cards. In the 10 years spanning 2004 to 2014, the country experienced a drop in annual counterfeit card fraud losses of £81.9 million.
Even before EMV was introduced, PIN proved to be more effective in fighting fraud. Between 2004 and 2010, debit cards using PIN verification accounted for only 9 percent of fraud whereas signature-verified debit cards accounted for 91 percent in the United States.
Prepare for the Chip and Signature Card Decline
The interesting twist is that not all EMV cards are issued to consumers with PIN capability and not all terminals can accept PIN entry. With the strong possibility of chip and PIN on the rise, it’s important to consider the equipment you’re using today to accept payments. If you’re using an EMV-capable terminal then you’re on the right track. However, how the terminal is situated at checkout and its level of software may render it useless in the event of chip and PIN adoption.
Work with a provider that offers a customer-facing terminal with smart technology. That way, if and when chip and PIN becomes the new standard, you already have a credit card terminal that is capable of accepting PIN and prompts your customer to do the work.