PIN and Chip Credit Cards

General Questions
#1

My family is taking a vacation to Europe. We’re starting in Copenhagen and the hotel said they won’t accept credit cards without a PIN. I checked with my credit card company, and they said, no problem except that if I do, I’ll have to have a chip and pin credit card for the life of the account, i.e. for ever. the way they made that sound, made me pause, but there is no additional fee on the card, and they say it can be used in the “normal way”, i.e. just a swipe in the US.

My questions are, what other countries require the PIN and Chip for a credit card, why do I have to have a PIN and chip for the life of the account and why don’t all the other nations require it? It seems like an added safety measure.

I can see one reason might be e-commerce, but that can be fixed with a relatively cheap card reader like the government uses to access its computer systems.

#2

Not sure why you need it for the life of the account, probably just for bank administration reasons.

Australia will shortly be requiring chip and pin cards only.

#3

Basically just about every country other than the US uses them, not all require them yet.

You can still use a swipe card in Canada if your card doesn’t have a chip but none of our banks issue non-chip cards. I suspect that as soon as the US starts issuing them to all cardholders we’ll go to requiring them as well.

#4

Britain uses chip and PIN cards very widely. The advantage, as you say, seems to be that they are more secure. I am not aware of any disadvantages, to the consumer, anyway (it may cost the card company and perhaps businesses who accept card payments at the counter a little bit more). I guess not everywhere has adopted them yet imply due to inertia. It is a bit like the USA’s reluctance to accept improvements like dollar coins, the metric system, or banknotes of different colors. The larger a country is, the more social inertia of this type obtains.

As for having to keep the chip and PIN card for the life of the account, that is probably just your bank’s policy, intended to to save itself the little bit of expense and hassle that would be involved in switching you back. It may also be that they want to promote the wider adoption of chip and PIN in America, but with most customers (unlike you) they have no leverage to get people to change over.

#5

The only disadvantage of chip/pin that I can see is that you may forget the pin. I forgot the pin for my credit card and am forced to swipe and sign. That’s fine but it also means I can’t use it to withdraw cash from an ATM and when we go to chip/pin required for all cards which is only a month or two away, I won’t be able to use the card until I get off my arse and have the pin reset.

#6

Chip and PIN is more secure in some ways, less in others.

It eliminates the need for retail cashiers to subjectively verify a signature, but (in the UK at least), the PIN is stored on the card to facilitate offline validation, so its possible for a technically competent card thief to extract the PIN and then make completely unchallenged transactions.

#7

Places that absolutely will not accept no-chip cards are becoming more common, many retailers won’t accept personal cheques either.

I saw a report on TV where the scammers who steal cards and suck money from your account, really like the ATMs that are used by American tourists who do not have chips on their cards - apparently it is relatively easy to extract the details from the magnetic strip.

This is not to say that chipped cards don’t get scammed. The crooks put a false front on the ATM with a tiny camera. They will get your card and the PIN if you do not cover the keypad when you punch it in. They also hang around anywhere that cards are used to clock the PINs, so use your free hand to hide the number every time.

#8

That is not quite true. I have a non-chip card issued by Bank of Montreal. It is a “purchase card” and my former employer pays the charge (from my research grant, which I still have). When I enquired, they told me that they have not yet moved purchase cards to the chip system. But they are considered quite a bit safer. As to why the US doesn’t do it, the only explanation I have ever heard is that merchants don’t want to have to buy new machines.

I really love them since usually the merchant doesn’t ever touch the card, see the number or see me entering my PIN. On the other hand, I have read that some dishonest merchants have jiggered their machines so that both the card number and PIN are recorded. I am not sure how to deal with that since I am sure that if the machines were tamper-proof, someone work out how to make machines that acted like the legal ones, but also recorded the information.

#9

Ok, next question. In the States, certain swipe machines ask for a PIN because they take both debit and credit cards. They say, “If no PIN, hit cancel” Since I have a PIN, if I hit my PIN, do I no longer have to sign or will it automatically assume the card is a debit?

#10

I think the US system is unnecessarily confusing. If I’m understanding correctly, it uses “sign” or “enter PIN” as a proxy to distinguish between making a credit-card transaction, and making a debit-card transaction, correct?

You guys use Visa- and Mastercard-branded debit cards, correct? In Canada, the national debit-card network is a completely-different brand called Interac. It is online debit, meaning that each transaction is verified on the spot. This means that you cannot have pending debit transactions that might pile up and then overdraw your account: if the money isn’t there, the transaction is declined. This also means that, if the communications link is down, the debit machines won’t work at all. (As far as I know, there is no way to phone in an Interac debit transaction.)

A few Canadian banks now issue Visa- and Mastercard-branded debit cards for use outside the country or online; they are also Interac and will operate as Interac when used at the point of sale.

I believe that the Canadian Visa and MC debit function is online and verified immediately. It would require a PIN, because all our debit cards required PINs right from the beginning, before the chip was ever added.

So are US Visa/MC debit cards online or offline debit? Is the transaction verified immediately, or does it get posted in a few days like the old-school credit-card transactions?

Are US credit card transactions always offline? Do they always take a few days to get posted?

#11

That’s “operate as Interac in Canada at the point of sale”.

Hari Seldon, is this your “purchase card”? I’d never heard of such a thing before.

#12

Pretty much all US credit cards will have chips by sometime next year. The recent Target breach may even help speed things up bit. There is certainly no reason to need to go back to a de-chipped card.

As far as I’ve been able to find, US banks are only offering chip-and-signature cards so far. If your hotel is really insisting on a PIN, that could be a problem. My experience in Paris last year was that my chip-and-signature card worked fine everywhere, although there were a couple of times when a waited handed us the machine for us to enter a PIN, and was surprised when it spat out a receipt for us to sign instead.

#13

I found a thread on FlyerTalk that goes into insane amounts of detail about Chip-and-PIN. Check it out: almost 200 pages of discussion…

#14

By entering your PIN, you are confirming the transaction as a debit transaction. If you hit “cancel” you are confirming the transaction as a credit transaction. Debit transactions are processed without signatures. Credit transactions below a certain amount (depending on the merchant, the issuing bank, and/or the issuing credit card company) may also be processed without a signature. That “certain amount” varies based on the merchant the issuing bank, and/or the issuing credit card company.

#15

How easy is this? “Technically competent” makes it sound like it’s an everyday occurrence.

#16

Wow, that’s confusing design. Method of authentication should not be related to type of payment. What happens when your credit cards get PINs?

#17

Doesn’t matter right now, as far as the machine processing the transaction is concerned, at least in the US:

[ul][li]Enter PIN = debit transaction[/li][li]Don’t enter PIN & press cancel just once = credit transaction[/li][li]Don’t enter PIN & press cancel twice = cancel transaction[/ul][/li]
I’m guessing that they’ll just change the entry screen to include “credit” and “debit” buttons and then you’ll have to enter the PIN after that.

I’m hoping they hold off a while on requiring chips for debit cards since my bank is in the US and I’m in China. I don’t want to deal with that delay awaiting the new card.

#18

Yeah, that makes sense.

Canadian debit cards are a separate brand, as I’ve mentioned before, so that sidesteps the whole issue. You take one or more brands of credit card, or you take debit. Separate cards and everything.

I have seen this be problematic for the occasional US American though. Last summer jools and I were crossing southern Québec, and we’d pulled off the autoroute for a meal. When we went to pay, I noticed that the cashier was explaining to the person in front of them that they did not take US debit cards with Visa/MC branding, just Canadian ones with Interac branding. Of course, they took Visa/MC credit cards.

I wonder whether this could be related to the difference between online and offline transactions? Perhaps the restaurant was not set up for online Visa and MasterCard transactions required by US debit cards? (Is it possible to use a US debit card in offline mode?)

#19

In many merchants I can still use my MC-branded US-based cash card as if it were a credit card (in fact it does not look to the naked eye any different) if for some reason it cannot be processed as a debit card.

The US has been hesitant to adopt the European-standard chip+PIN system because of the sunk investment in magstripe infrastructure and the costs of conversion – partly the costs of migration to chip+PIN mode, yes, but also because (as has been discussed in another thread on anti-RFID wallets) there are US processors who seem to want to migrate rather into RF-based “touch and pay” or “wave and pay” cards which use a no-contact chip so you can just wave the card at the POS terminal and keep going. So you’d need to invest in two rather than one new payment system.

#20

But we have contactless Chip and PIN cards here as well, even Interac debit cards. I gather that it uses the chip’s EMV encryption and everything, rather than just transmitting a copy of the magstripe data as pre-EMV contactless did.