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Chip-and-PIN vs. ‘chip-and-sig’

By Janna Herron · Bankrate.com
Wednesday, August 28, 2013
Posted: 5 pm ET

As EMV-enabled chip cards migrate to the U.S., two types of credit cards containing the security microprocessor chips exist. There's the chip-and-PIN card and the chip-and-signature card. What's the difference?

What separates the two is how each is authenticated at the register. Chip-and-PIN cards require a personal identification number to be entered to complete a purchase, much like how many debit card transactions are carried out now with magnetic stripe cards.

Chip-and-signature cards, also called "chip-and-sig," only require a signature to finish a transaction. That's similar to most traditional credit card transactions in the U.S.

The chip-and-PIN card transactions are more secure than chip-and-sig cards, largely because they help deter fraud arising from lost or stolen cards. It's harder to guess someone's PIN number than to forge a signature that cashiers often don't check, says Randy Vanderhoof, executive director of the Smart Card Alliance.

Worldwide, 60 percent of EMV cards are chip-and-PIN cards and 40 percent are chip-and-sig cards, according to a recent presentation by MasterCard's Carolyn Balfany at the Card Forum & Expo.

In the U.S., the type of chip card given out is mixed. Bank of America and several credit unions offer chip-and-PIN cards, while Chase and U.S. Bank offer only chip-and-signature cards. Citi and Wells Fargo offer the option of entering a PIN if the retailer supports that type of transaction. (These issuers offer EMV cards for certain cards, rather than for all credit cards they issue.)

"The reason there are two types (of EMV chip cards) in the U.S. is for legacy reasons," says Vanderhoof. "People are used to signature and all terminals are equipped with signature capture devices or provide signature receipts."

Chip-and-signature cards are easier and cheaper, too, Vanderhoof says. Chip-and-PIN cards require issuers to assign a PIN before mailing the card and require a cardholder to visit a branch to reset the PIN.

It remains to be seen if the U.S. will lean toward chip-and-PIN or chip-and-signature as EMV slowly takes over the payment landscape. The deadlines for the shift to EMV from the major payment networks -- Visa, MasterCard, Discover and American Express -- don't specify what kind of card must be issued or supported.

Which one do you think should be adopted?

Follow me on Twitter: @JannaHerron

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4 Comments
John G.
February 27, 2014 at 8:24 pm

EMV cards aren't cheap. They're expensive to issue and even more expensive to accept at merchant locations, as merchants not only have to purchase EMV terminals but have to have each one certified on site. The only reason to go with them is that counterfeit, lost and stolen cards cost more every year and they are more easily verified.

Roy
September 12, 2013 at 2:47 pm

There is no question in my mind that Chip-and-Pin is the right choice. I traveled to France, Germany, and the UK with my Chip-and-Signature card this April, and found that it was worse than useless. The automated kiosks for things like train tickets expected a chip-and-pin, and even the restaurants that took credit cards could not read the chip-and-signature card. It seemed like the presence of the Chip make them expect a pin, whereas my magstripe-only cards worked fine.

And I am not talking about mere-et-pere restaurants in Paris, mind you. I'm talking about places like the Louvre, which get millions of visitors per year.

I don't know why US card issuers have their head in the sand about this. It frustrates me that AMEX in particular is so far behind the curve. But, I bet that a major reason for this is that EMV doesn't include the letter A in its acronym...