Q&A Video – What Is The Difference Between Chip-and-PIN and Chip-and-Signature?

John Ulzheimer

John Ulzheimer | Q&A Videos

Nov 07, 2014 | Updated Feb 17, 2015

Cards with Chip technology are becoming more popular, enhancing the security and usability of these cards. They use EMV technology to replace the traditional magnetic stripe on credit cards. Learn more in our video with credit expert John Ulzheimer.


Hi I’m John Ulzheimer, a credit expert who contributes to CreditCardInsider.com. Today’s question is this: What’s the difference between Chip-and-PIN cards and Chip-and-Signature cards?

So let’s clarify exactly what a Chip-and-PIN card is in the first place and then we can discuss the difference between Chip-and-PIN and Chip-and-Signature. Today’s credit card technology, and as a matter of fact probably all the credit cards that you currently have in your wallet use what’s called mag stripe technology or magnetic stripe. It’s this little black stripe that goes across the back of your credit cards, and on this magnetic stripe is all of the credit card information necessary for the merchant or retailer to complete a transaction.

So when you go to the store to buy something and use your credit card, you take your card and then you swipe it on some sort of reader and that reader pulls the information off this magnetic stripe, and is then able to complete the transaction accordingly because that’s where things like the account number are. You may notice that when you go to a retailer you are asked to swipe the card and sometimes you have to sign a keypad or a receipt and sometimes you’re not required to sign anything when you complete your transaction.

With Chip-and-PIN the technology is very different than the magnetic stripe technology. There is no magnetic stripe on a Chip-and-PIN credit card. The information about the card, for example the number of the card, what identifies it as your card is actually stored on a microchip that is embedded in the card, and today these cards are not terribly common in the US because most retailers do not have the scanners at the point of sale or the checkout line to be able to read the chip technology, so today we are still kinda stuck with this magnetic stripe, but eventually within the next couple of years we are going to move probably fairly aggressively off of the mag stripe technology towards the Chip-and-PIN technology.

So let’s talk about the differences between Chip-and-PIN and Chip-and-Signature now that we have an understanding of what this microchip is actually going to mean for a credit card. Chip-and-PIN is a common or informal way to describe what’s referred to as an EMV card or Europay Mastercard Visa which is the formal name of the technology in Europe. It’s actually very common in Europe and very uncommon in the United States for now.

The EMV card requires not only a reader that can read the information off of the microchip of the card but also that you enter a four-digit PIN, and that essentially acts as your signature or the verification that the person using the card is actually the owner of the card or the card holder, so if you’re using a Chip-and-PIN card you are going to be required to know the four digit PIN that corresponds to the information on the chip. If you try to use the card and you enter the wrong PIN your transaction is going to fail so you can see right away that it is infinitely more secure than the magnetic stripe technology that we’re currently depending on in the United States.

The Chip-and-Signature cards will not be quite as secure as the Chip-and-PIN cards because a PIN is not required in order to complete a transaction. You will still either tap the card or place the card up against a reader that information off the chip is then read and then you will be required to provide a signature and that will complete the transaction, which sounds very similar to how it’s done today.

Here’s why that’s still a little bit more secure than the traditional magnetic stripe cards – because the information off of the mag stripe can be easily stolen using a piece of hardware called a skimmer, but you cannot steal that type of information off of a card with a microchip, so even though you can use the card with the chip and complete a transaction with the signature which is less secure than a PIN, it still is fairly secure relative to what we’re using today.

So again just to summarize the difference between Chip-and-PIN versus Chip-and-Signature – to complete a transaction with Chip-and-PIN you’ve gotta have the 4-digit PIN or the transaction’s gonna fail. To complete a transaction with Chip-and-Signature you just have to have a signature. That’s the difference.

If you have any other questions pertaining to credit or any financial topics please submit them to CreditCardInsider.com. Thanks for your time and have a great day.

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