PIN & Chip cards

I just used my Andrews chip card w/PIN about 35 times in France, and, as expected, except at unmanned gas stations and a tram station machine, I always had to sign. But it didn't seem to take particularly long; and they always had a pen.

So let me get this straight: The writer was upset because it takes a few extra seconds and requires signing a little paper receipt? That seems to be the whole point of that article. Talk about first world problems...

US chip & signature cards have proven far more valuable than the old magnetic strip cards. They do have some remaining limitations, such as not always working at machines without a PIN, but merchants are more familiar with them, many machines will accept a transaction even without a PIN and they greatly reduce fraud.

And yes, US cards that have a PIN will almost always require a signature. The US banks are using signature as the primary validation. The PIN is typically only used when no signature validation is possible (like automated machines).

I think there are three larger points, though maybe not made as clearly in this article as they might be:

1. People from the US who have a card with a chip in it may think it will work in Europe with a PIN if they just get a PIN from their bank. This isn't true. Chip-and-PIN cards are different from chip-and-signature cards. There are a few banks in the US that issue chip-and-PIN cards, but most do not. The typical US card will still require a signature in Europe and so may not be usable in kiosks or ticket machines at train stations.
2. Even if you have a true chip-and-PIN card from a US financial institution, you may still have to sign. Not a huge deal, but it's still not as secure as it might be, because if your card is stolen, someone else can use it by forging your signature.
3. And this is the problem with the current, prevalent chip-and-signature cards in the US. They are just not as secure as chip-and-PIN cards. It's really too bad we are so far behind in this. It's not just a matter of convenience for travelers. It's a matter of card security. And even if you're protected by your bank, the cost of card theft and fraud is staggering. The banks and merchants may bear the cost, but guess who pays in the long run.

Americans have always had credit cards requiring a signature, regardless of how the card is advertised, chip and signature, magnetic stripe. Even though I've received updated cards with only chip and signature, I still carry both. The mag credit card is 25 years old. Will it change to exactly the way Europeans have it, I won't hold my breath. My bet is that it won't change.

On a related note, maybe Douglas or someone else can here can help me figure out when a US card with a chip is a true chip-and-PIN card, not a chip-and-signature card. Here's my guess:

Chip-and-PIN that works offline in automated machines: The bank assigns you the PIN and you are not allowed to change it

Chip-and-signature that doesn't work offline: The bank lets your determine your PIN and/or allows you to change it.

Thanks for your help.

T., I'm not sure where my Andrews card fits into this It's always signature when a person is present, but works with a PIN at unmanned gas stations and tram/metro/train stations. I'm not sure whether it works offline, but it works. I believe when I got it I was informed that the PIN was not changeable, but I'm not sure.

To answer a couple of questions and statements:

A "true" chip & PIN card will always use the PIN as the validation (unless for some reason entering a PIN is not possible, then it reverts to signature). One can still change the PIN if you don't like the one assigned to you. There are almost no US based credit cards that are actually chip & PIN.

A chip & signature card comes in two options: one that also has a PIN as a secondary validation option if a signature is not possible (such as a machine); one that only has a PIN available for cash advances. That PIN can also be changed but generally cannot be used for purchases (only in an ATM like you would use your debit card for cash). US banks have pretty much adopted the chip & signature system for the time being, but many are issuing cards with a PIN for secondary validation. It can be hard to determine if the PIN offered is for validation or only for cash advances.

Now to confuse things: Sometimes one can use a chip & signature card in a machine without a PIN if the purchase is less than about $50, or the machine is set to allow un-validated transactions from non-PIN cards. And sometimes you can enter your cash advance PIN and it will work in European machines (which is technically an un-validated transaction and the PIN is not working as a validation PIN typically would). But the only way to know is to try; it might work and it might not.

Any card with a chip (EMV) is far more secure from fraudulent actions than the old magnetic strip cards were. The vast majority of credit card fraud is duplication of valid cards, not using stolen ones. I would guess that once the entire system has been converted to EMV, banks will then transition to PIN validations.

Douglas,

That's an excellent and concise description of the various types of cards. As you mention, card security will be much better once the full conversion to EMV cards is completed. However at the present time, even true C&P (EMV) cards have an "Achilles heel" in that they still have a magnetic stripe which can be used for transactions. It will be nice when that stripe is removed permanently.

I hate to confuse the matter more, but as usual I will. From a very basic standpoint, there is not really something such as a "true chip and pin" or simply "chip and signature" cards, though those are common terms and they may be useful for basic discussions. All cards, and let's only consider those with EMV chips in them, functionally are the same in that the reader interfaces with the chip and initiates the transaction. The differences people argue over is what happens then.

Each card issuer controls the methods and order of the Cardholder Validation Method (CVM) EMV chips can support several, Online PIN, Offline PIN, Signature, and No validation Method Required. Problem is, you may not be able to exactly determine what order or what methods your card allows and your card issuer may not readily tell you (or at least the typical customer service telemarketer may not have a clue) Further complicating the issue is that the Merchant in conjunction with their card processor may further limit the methods allowed, partly as a liability limitation strategy.

So...I have a card issued by CITI on a business account for which I set up a PIN upon issue and will work in Europe. From my experience, I believe the CVM order to be Signature, Online PIN, Maybe Offline PIN, the No verification method. So when I travel in Europe, in more touristed parts, I often am asked to sign a receipt. At the Hofbrau in Berlin though, the only option was to use a PIN, I suspect because they opted not to accept signatures for PIN cards and the same for other places, and for a few small transactions, no PIN or Signature was required.

So do we call this a "True Chip and Pin" a "Chip and Signature" or something else? It doesn't matter. In the end, the only thing you need to know is if your card has a PIN option, if not, then your options may be more limited, but typically someone will be willing to take your money and find a way to make it work.

What's holding up the conversion to Chip and Pin is the vast number of merchants, especially small merchants who will have to convert their equipment to accept new cards. We'll get there eventually but it's getting everyone up and running with new equipment that's holding things up for now.

I thought a couple of US financial institutions were offering chip and pin but I've talked to a couple and found that they have chip cards, with a pin, but they aren't truly chip and pin. They are actually chip and signature cards even if their advertising might lead you to believe differently. With Cap One if you use the pin instead of a signature, the transaction is processed as a cash advance - the worst possible option for the consumer, which seems a little underhanded.

Ironically, I just received an invitation to a presentation May 3rd at the Rayburn building (Congressional offices) entitled:

"So you have a chip card, now what?"

It's to "examine progress industry and retailers have made implementing chip terminals, discuss merits and drawbacks compared to chip and signature cards, and learn more about how Congress and the White House are working to protect us from credit card fraud and identity theft."

It's put on by a group called "Protect My Data" and seems to be group of consumer and merchant groups.

Sounds interesting, I wish I had time to attend.

Brad,

That comment about Capital One treating PIN transactions as cash advances is absolutely not true. I know this from personal experience.

I used my Capital One Visa credit card last October in Italy at multiple merchants including restaurants, wine merchants, and unmanned train ticket kiosks where I was asked for a PIN, I used the real PIN for the card and every one was approved and absolutely zero of these transactions was treated as a cash advance.

Now if you get cash out of an ATM with your Capital One CREDIT card then yes, that is a cash advance subject to the high rate of interest and fees that go along with any cash advance.

Mark is right, a PIN used for a purchase, no matter what type of PIN it is, will be a purchase. A "cash advance" PIN might not work for a purchase in some cases, but often it does at automated machines. But it will not register as a cash advance. To be charged interest for a cash advance, you take money out of an ATM.

On buying train tickets from DB machines, I have never had a single problem using my US mag stripe credit card, the transaction always went through, likewise with the newer chip and signature card. Never had any US credit card denied using DB Automat,. DB Automaten are the most accommodating train ticket machines for American credit cards.

For those with Andrews chip & pin card, you can change the PIN - call 888-886-0083 and follow the steps.

I also used the DB ticket machines frequently last year without a hitch. I did have problems at some German hotels and restaurants, though, and occasionally also in the Balkans. Not a hiccup during 2 months in Italy. You just never know. I was very glad I had two cards with me.

However at the present time, even true C&P (EMV) cards have an "Achilles heel" in that they still have a magnetic stripe which can be used for transactions. It will be nice when that stripe is removed permanently.

Removing the mag strip from cards won't happen for many years. In the US, many merchants still haven't converted to EMV and many small merchants won't for a very long time. Gas pumps aren't due for conversion until October 2017 and given how long it is taking for merchants to upgrade, it will be years after 2017 that all gas pumps are converted. Plus, the mag strip is a back up option for manual processing in case the EMV reader is down.

In theory, the mag strip does not pose a security risk once most merchants have converted to EMV. If you try and swipe the card in a reader that can process EMV, it is supposed to prompt you to insert the card into the chip reader.

Douglas,

Thanks for the info on that. The main problem with magnetic stripe cards (at least in some cases that have happened in this area), is that a clerk or waiter takes the card out of sight of the cardholder and swipes it through their own Reader, and thus gains enough information to make fraudulent purchases. The other problem is with fuel pumps or ATM's that have had a "fake" reader glued over top of the real one. In some cases, the scammers install miniature cameras above the keypad to capture the cardholder entering the PIN. Once the mag. stripe is gone and tokenized EMV transactions become the norm, hopefully some of these problems will go away.

Since the early 1990s the US credit card has had basically the same technology, regardless what the Europeans have. The main thing is whether the US credit card tech still is accepted in Europe by retailers, etc when we travel there.. Obviously, in some countries it is, Austria, Germany, in other countries, it's more difficult or chancy or not accepted (in train stations)...Holland, France (SNCF machines).

Sometimes when told by the retail employee that your US credit isn't going through, the problem is not with your card at all but with that particular employee, who does not know how to work your card, and then blames the card for no transaction. Convenient, isn't it? I've seen this several times. But only in France. The employee didn't know how to work the US credit card. Result: a no go. What then? Pay cash and leave, or dispute it. With my slow French language skills not being up to par, no use arguing. In Germany a totally different story. But, luckily each time the US credit card didn't work or appeared as such, I was with a Fr. native speaker and impasse was cleared up. Each time the problem was not with my US mag stripe card.

Couple things:

Installing a chip reader is not the final step: then it has to be authenticated and there is a months long queue for this. That's why so many US chip readers are still not operating.

I can also verify that chip and signature will work with PIN at metro kiosks in Paris and Copenhagen, in Paris even for more than $50 (5 RER tickets to CDG).

Tom_MN,

"Installing a chip reader is not the final step: then it has to be authenticated and there is a months long queue for this. That's why so many US chip readers are still not operating."

During the conversion here, I found that the smaller "Mom & Pop" stores that only had one POS terminal were set-up very quickly. The larger stores that had multiple branches and their own central data system took much longer.

During the conversion here, I found that the smaller "Mom & Pop" stores that only had one POS terminal were set-up very quickly. The larger stores that had multiple branches and their own central data system took much longer.

Tom_MN is right, many large retailers waited until the very last minute to set up their chip reading systems and are now waiting for their systems to be authenticated and activated. There is a long backup and it's taking months for many systems to become activated.

In the US, based on my unscientific observations, it is the mom&pop stores that will be the holdouts. Their exposure to credit card fraud is very small and not worth the expense and hassle of converting to chip readers. There is no legal requirement that they do so.

Mark,

You may be right about your Cap One card. I have the Cap One Venture card, they may have several cards under the name.

I looked forward, with great anticipation, to getting the chip card after they announced it. When I got the card, however, I read the cardholder's agreement and found that using the pin would be handled as a cash advance. I called customer service and asked the question specifically and was told the card is really a chip and signature card. The pin is only for cash advances so, if you use the pin, the bank will recognize the transaction - regardless of the type of transaction - as a cash advance.

The second card I've looked at is my USAA card. It's essentially the same thing except I never saw any advertising that would lead you to believe differently. The good thing, for me, is USAA treats my cash advances the same as purchases - but I wouldn't expect that to be the norm with most cards.

This may have changed but I haven't received any new cardholder information along that line.

Douglas,

I have no information on how the changeover is being implemented in the U.S., but my observations here were that the smaller stores (such as the local corner store in my neighborhood) were switched over very quickly, while the larger chains such as Safeway took much longer to complete the conversion.

"Their exposure to credit card fraud is very small and not worth the expense and hassle of converting to chip readers. There is no legal requirement that they do so."

In our case, I don't think this was a "voluntary" conversion. Merchants were likely told by the Banks or whoever runs the system, that they either convert or they would no longer be processing debit or credit card transactions after a specified date. That sort of thing tends to be normal up here, and another good example was our conversion to Metric measurements. There was no choice in the matter.

Brad,

Yes, Capital One (and nearly every other credit card issuer) is going to tell you that using a PIN makes the transaction a cash advance. And maybe it does in the US. I have never needed to use a PIN on any credit card transaction in the US so I don't know if that would be true here or not. I had that argument with Cap One and Chase when I requested my PIN so now I just make the request and say "OK" when they go on their rant about getting charged as a cash advance. The provided documentation is not going to change because you simply do not need a PIN in the US when using most credit cards. The scripts the phone agents use are fine tuned for customers using their cards in the US (unless the card issuing bank is not in the US then the responses you get will be tuned to that country).

But the only place you will or can be charged as a cash advance using a PIN is if you get cash out of an ATM with your credit card. Try it once to make a purchase at a kiosk or other place a PIN is required next time you are in Europe. If you get charged cash advance fees and interest, I will pay you the interest charged by your card issuer. ;-)