Definition and Examples of a Chip-and-PIN Card
A chip-and-PIN card is a payment card that has a smart chip and typically requires that you enter a PIN into a card processor as an added security measure. For purchasing, it works similarly to the chip-and-signature cards that are currently used more widely in the United States. To verify your identity, you “sign” with a PIN instead of with your written name on a receipt. Many chip-and-PIN cards also have a magnetic strip so that they can still work on processors that are not designed for chips. Others may also work as a contactless card, meaning you can just tap the card on the processor and then enter your PIN.
Alternate Name: Smart card, a chip card, an EMV card (EMV stands for Europay, Mastercard and Visa), chip and PIN-enabled card, PIN-priority card, PIN-preferred card
A chip-and-PIN card is specially configured so that it can only be verified by a PIN, not a signature, any time that it’s inserted into a card reader that accepts chip-and-PIN payments. So, if a cardholder forgets their PIN, they cannot make the transaction with the card at that processor.
Where Chip-and-PIN Cards Are Used
Chip-and-PIN cards are widely used across the world and are considered to be one of the most secure types of payment cards available. According to EMVCo, 88.5% of card transactions around the world as of Q2 2021 use an EMV chip rather than a magnetic stripe to process in-person card payments. The United States is one of the few countries in which chip-and-signature cards are more widely used than chip-and-PIN cards.
How Chip-and-PIN Cards Work
In practice, using a chip-and-PIN card is very similar to using a debit card as the customer swipes the card then enters their PIN. Chip-and-PIN cards help secure cardholders’ transactions by using multiple layers of security to prevent the card from being counterfeited and to verify the cardholders’ identity. When you insert your chip-and-PIN card into a payment reader, the smart chip passes on a unique, single-use code to the merchant’s card reader. That code is generated at the point of sale and encrypted, so it can’t be easily cracked by thieves, nor can it be reused. The next time you use your chip-and-PIN card, the chip embedded in your card will generate a new code. Your PIN, on the other hand, won’t change from transaction to transaction. Instead, you’ll use the same code for every chip-and-PIN transaction, unless you request or are assigned a new one.
Do I Need a Chip-and-PIN Card?
If you live in the U.S., where chip-and-signature cards are more commonly used, you may not need a chip-and-PIN card. However, if you travel regularly, it may be worth securing a PIN-enabled card so you don’t risk having your transaction declined. A number of issuers allow you to set a PIN for use abroad. Some issuers equip all U.S. cards with PIN capabilities, so your chip-and-signature card may already be able to function like a chip-and-PIN card.
Alternatives to Chip-and-PIN Cards
In many scenarios, chip-and-signature cards are an acceptable alternative to chip-and-PIN cards—especially if they also feature contactless technology. In some cases, you may also use a PIN-enabled debit card as a chip-and-PIN card. In that case, you would type in your debit card personal identification number. Consider carrying extra cash when you’re traveling in case your card is declined.
Benefits of Chip-and-PIN Cards
Chip-and-PIN cards are considered to be more secure than other types of card payments like chip-and-signature cards and magnetic stripe cards. It’s also easier for thieves to steal a magnetic stripe card’s data by installing special tools, such as a skimming device, on a merchant’s card reader. Chip cards, by contrast, are harder to crack because they use a one-time-use code to communicate a customer’s payment information. So the data can’t be reused even if it is stolen. Chip-and-PIN cards are also more secure than chip-and-signature cards because of the extra verification that they require for your identity. If a chip-and-PIN card is stolen, for example, a thief won’t be able to use it (on non-contactless transactions) if they don’t know the PIN.
How To Get a Chip-and-PIN Card
First, check with your card issuer to see if you already own a PIN-enabled card. For example, some credit card issuers equip all of their cards with PIN technology. Others let you use your chip-and-signature card as a PIN card when you travel abroad by using your cash advance PIN. In some cases, you may also use a PIN-enabled debit card as a chip-and-PIN card. If none of your cards have PIN technology built in, then start your search for a card that fits your needs. If you are a U.S. resident, consider travel credit cards, which are more likely to have PIN capabilities. Many travel cards also have contactless technology and don’t charge foreign transaction fees. Apply for a chip-and-PIN credit card just like you would apply for any other credit card. You will need to fill out an application with the issuer and provide key personal information. The issuer will review your credit history and other information to determine whether to approve you.
