A Guide to Chip and PIN Credit Cards

A Guide to Chip and PIN Credit Cards

Paying for goods with a credit card is always convenient. There have been some changes in how the cards are processed over the years. The force behind these changes has always been technology. The swipe and sign checkout process are what most people are familiar with.

With the introduction of chip and PIN cards, the checkout ritual will look a little different. Instead of signing, you will punch in your four-digit personal identification number. These new cards are said to be more secure than the magnetic stripes.

Americans are usually surprised when they visit other countries and realize the chip and signature cards are not used. The international card standard is the chip and PIN cards. Most security experts believe that these cards are the safest and less prone to hacking.

It offers a certain level of protection against data breaches. Since the cards are starting to spread, some people are yet to understand how it all works. This guide will show you some basics you need to know about chip and pin credit cards.

How Does A Chip And PIN Credit Card Work?

A chip and PIN card is a type of credit card where you must authorize the transaction by entering a PIN. The previous cards utilized magnetic stripes, which contained the cardholder's information. Chip and PIN cards have a microchip that generates and stores information about all your transactions.

These cards were introduced to reduce skimming cybercrimes and point-of-sale (POS) credit card number theft. The metallic chip makes these cards less susceptible to fraud. From a customer's perspective, it will look similar to using the previous magnetic stripes cards. You will insert the card into the POS terminal, which will prompt you to enter the PIN.

The older system of swiping and signing was faster, but it had some disadvantages. Chip and PIN cards are an improvement, even if they make the checkout process a bit longer. The metallic chip provides a unique code for every purchase, making it difficult for any theft.

When you sign up for a chip and PIN card, you will pick a unique four-digit PIN. With a unique number that only you know, it’s difficult for anyone to commit fraud. You can change the PIN anytime you want. You will be using the PIN every time to verify that it’s you making the purchase.

Forging a signature is easy, but guessing a four-digit code is very difficult. Chip and PIN cards might be new to some people, but the technology has been around since the 90s. The reason why these cards are more secure is that they use cryptography.

It won't be any different from the credit card you have been using. The only part that changes is the PIN and signature parts. Instead of putting in your digital signature, you will be punching in some numbers. Not everyone has had a chance of using the chip and PIN card, especially in the US.

Where Are Chip And PIN Cards Used?

These credit cards are widely used across the world. America is one of the few countries where chip and PIN cards are still not widely used. America was in no rush to start using these cards because the telecommunications infrastructure in the country could easily support the old metallic stripes cards.

Switching to chip and PIN cards was more necessary in countries where fraud was rampant. But more countries are embracing the safe cards now. Even MasterCard and Visa, the biggest credit card companies in America, have plans to switch to the chip and PIN credit cards.

Some countries still use chip and signature cards, but the shift may happen sooner or later. With time chip and PIN cards may become the most used worldwide because they are universally accepted. If you travel out of the US regularly, you should think about getting a chip and PIN card.

The chip and signature card you are used to may not work in all your travel destinations. But you don’t have to get a new card since some credit card providers have PIN capabilities built into all their cards.

Benefits of Chip and PIN Credit Cards

Chip and PIN cards are more secure than the chip and signature credit cards. In the wake of data fraud, this is a massive benefit. The data encoded in the magnetic stripes technology is easy to steal. So many hackers have done it in the past, which has led to so much identity theft. The data stored in magnetic stripes is static. If a thief gets it, they can use the information to create a duplicate card.

Chip and PIN use one-time codes to communicate your payment information. A thief could not reuse the data even if they stole it. They are also more secure because they require extra verification of your identity. You can't complete a purchase without entering your PIN. They are more difficult to hack.

Extra security remains the main benefit of using chip and PIN credit cards. That is why more countries are using them. However, if you are in the USA, you can hold on to your chip and signature credit card for some time because they are still widely used.

But you should keep in mind that even some chip and signature cards have zero fraud liability policies. That means you won’t pay for any transaction you didn’t make. If someone uses your card for fraudulent purchases, you won't be liable. This is a consolation for most chip and signature users.

How to Acquire a Chip and PIN Card

Consult your card issuer first to see if they offer PIN-enabled cards. Some credit card issuers equip all their cards with PIN technology. Before looking somewhere else, you should know if any of your cards have the chip and PIN capabilities.

If none of your cards have PIN capabilities, look for an issuer that has the card that fits your needs. You will apply for the cards just like you would any other card. The issuer will always review your credit history before determining whether you qualify. Most US-based citizens looking for these cards are frequent travelers.

Some issuers offer PIN capacity, meaning you can add a PIN to your card that didn't have it. This makes it easy to switch to chip and PIN for those interested. You won't have to change your credit card.

Final Thoughts

Chip and PIN credit cards work slightly differently from metallic stripes cards. It requires you to complete a purchase using a unique four-digit code. They also have a metallic chip that generates one-time use codes after every purchase. They provide more security features than the usual cards. It's tough for someone to steal your information and use it for fraud. It can be an upgrade in terms of security. Most countries across the globe have been using chip and PIN cards for years.

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