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What Separates Chip-PIN and Chip-Signature Combinations In Credit Cards?

What Separates Chip-PIN and Chip-Signature Combinations In Credit Cards?

The credit card industry has undergone a rapid change in the last decade or so. We are moving from vulnerable payment technology and transitioning into more secured and smart chip card technology. This is not something new, but a recent spike in fraud has led the shift to stronger security technologies such as chip-PIN cards.

Since the adoption of EMV technology, the chip-based cards have reported lesser scam and more security. This has led to the evolution of buzzwords like chip and signature, and chip and PIN. Let us take a deep insight into the technology behind these for credit cards.

EMV And Chip Technology

With a chip-based card, the data is stored in a chip on the card’s face, and you are asked to punch a 4-digit pin or give a signature for the purchase made. As per VISA, the one-time use code generated by the technology is hard to forge, and the codes are required for verification of each individual transaction. So there is no persistence of information that can open floodgates for the hackers, and make inappropriate use of data.

Magstripe Technology

The magnetic stripe you see at the back of debit and credit cards is iconic. It stores both the financial and personal information of the cardholder, however, it is not safe enough for all the banking data. These cards are vulnerable to identity theft, since it keeps the information easy to copy and re-encode, which can be used to profit, resale or purchase at the expense of the cardholder.

Chip-PIN Combination

This is the latest trend in the credit card industry, in terms of modern security. Chip and PIN is considered to be the best technology, as it ensures maximum safeguarding and security of personal finances and information. In this case, PIN entry is needed in place of signature.  The pins are embedded into the chip of the card, rather than being filed or stored in the back room of offices. It is very difficult to counterfeit such an information.

Chip-Signature Combination

The most predominant form of EMV card in the market today is ‘chip and sig’. A majority of financial institutions have this as an option. It has all the important attributes of a sound technology, including:

  • Compliant With The Mandate
  • Magstripe On Back
  • Widely Accepted by EMV terminals
  • Fraud Protection

Instead of entering a PIN number, you need to sign for purchases in this case. It makes the process easy to remember, quick and convenient. On the other hand, it also opens up the scope of forging or theft. PIN is more confidential than a signature, since anyone can counterfeit a signature, without being prompted for verification.

Merchants and credit-card issuers have always had a fight among themselves, finding it difficult to decide between chip and PIN and chip and signature card. Regardless of the fact, which one is employed, the underlying technology of chip based cards are meant to decrease identity theft and fraud in an age where such issues are prevalent for credit cards.