Chip-and-PIN vs. Chip-and-Signature

 Chip And Pin

It’s become a common question for international travelers: Will my credit card work abroad?

Central to this determination are the differences in credit card fraud prevention technology being employed around the world. While the United States continues to rely on the magnetic stripe technology adopted in the 1970’s, most places – including popular tourist and business destinations like Europe, Asia, and Canada – have progressed to chip-based smartcards based on the EMV standard.

This disconnect means that in rare occasions, magstripe cards may not work outside of the United States. To compensate and appease savvy international travelers, a few major U.S. issuers have begun offering chip cards on a limited basis – a move that’s raised a whole new set of questions:

What’s the difference between chip-and-PIN credit cards and chip-and-signature credit cards?

Chip-and-PIN is the most secure type of credit card technology. Instead of a signature being used for identity verification, it requires you to enter a four-digit Personal Identification Number (PIN) that must correspond to information contained in a computer chip embedded within the card. The inclusion of the computer chip in chip-and-PIN cards makes them exponentially harder for fraudsters to replicate, and even if they do manage to get ahold of your card, they won’t be able to rack up charges with it because they’d need to know your PIN to do so.

Chip-and-signature credit cards differ from chip-and-PIN cards in that you verify your identity with your signature, rather than via PIN. They are therefore not quite as secure as chip-and-PIN cards but are more so than magnetic stripe credit cards in light of the embedded computer chip. Chip-and-signature credit cards are generally accepted everywhere chip-and-PIN cards are, with the exception of certain unmanned payment terminals equipped to take chip-based cards.

Are there any disadvantages to the chip-and-signature cards offered by US issuers?

The majority of smartcards yet introduced in the United States are chip-and-signature credit cards (which, like all chip-based cards, also have magnetic stripes). Credit card marketers are intentionally vague about the specific chip-based technology they use, but the truth is that chip-and-signature is generally viewed as a half-measure that doesn’t solve the biggest problems that international travelers have.

First and foremost, in countries that have made chip-and-PIN their credit card standard, chip-and-signature credit cards are useless at certain unattended automated kiosks, such as you might find in European train stations or, as one of our readers informed us (See Comments below), certain small restaurants and parking garages. While such kiosks are certainly the exception rather than the rule, according to Stephanie Ericksen, the head of authentication product integration for VISA, who says there is very little acceptance disparity between chip-and-PIN credit cards and chip-signature cards, that will likely offer little solace if you find yourself stranded in a train station late at night with no means to buy a ticket to your destination.

You probably won’t care that unattended kiosks don’t necessarily have to require PINs either, according to Randy Vanderhoof, executive director of the Smart Card Alliance. He claims that the inapplicability of chip-and-signature cards to unmanned kiosks is a product of the way they’re set up, rather than the technology itself. Regardless, all that will matter to marooned travelers is the simple fact that they cannot use their cards to purchase the tickets they need to reach their destinations. Besides, do we really expect European officials to go back and change all of their machines just to accommodate U.S. tourists, who are viewed on that side of the pond as using outdated credit card technology anyway?

In rare occasions, there are also logistical issues involved with trying to use chip-and-signature credit cards at places that are supposed to accept them. Poor merchant training about when a PIN is truly required for payment processing has been known to create confusion despite the fact that 1) VISA and MasterCard require that all attended point-of-sale machines be equipped to accept chip-and-signature transactions and 2) when a chip-and-signature card is inserted into a payment terminal, the terminal will generally recognize that no PIN is required and will instead print out a receipt saying “verified by signature.” Even if you have a firm grasp on the language, which most tourists do not, trying to convince a foreign merchant who is accustomed to only processing payments via PIN that your card does not require a PIN could prove pretty frustrating.

To be fair, the credit card infrastructure in a lot of countries – namely Spain, Portugal, Italy, Germany, Turkey, Mexico, Australia, New Zealand, China, India, Russia, and most of Southeast Asia – is based on chip-and-signature or online PIN technology. But given that the chip-and-signature cards being offered by US issuers don’t come with corresponding PINs for even online verification, you might still run into problems.

Why are US issuers primarily offering chip-and-signature credit cards?

That’s a good question because while Ericksen says that US issuers of chip-and-signature cards have seen increased international acceptance relative to magstripe cards, practical experience and consumer feedback indicate that you can still use magnetic stripe credit cards pretty much anywhere that will accept a chip-and-signature card. And the few places where magstripe cards don’t work (i.e. certain unattended kiosks), chip-and-signature cards don’t tend to work either.

The most obvious answer is marketing. Credit card companies can market chip-based credit cards as having special new features and thereby charge more as well as attract new customers, even though the specific technology they’re advertising doesn’t have much practical benefit.

Liability shifts also play a role. While banks have long been held accountable for fraud, new VISA/MasterCard policies designed to increase the prevalence of chip cards will largely shift liability to merchants who have not equipped their stores to accept chip cards beginning in 2015. Banks who do not offer these cards will apparently retain some of the burden, however, and it’s the appeal of free liability insurance that will drive them to bring chip cards to the US, according to Jack Jania, senior vice president and general manager of secure transactions for Gemalto, Inc., a Netherlands-based smartcard manufacturer. In fact, Jania says Gemalto is already seeing large-scale orders coming in from U.S. issuers.

In addition, there are certain transitional, regulatory and logistical issues for banks that explain why they have not simply adopted chip-and-PIN credit cards.

Much, according to Jania, depends on the infrastructure needed to support PIN management. Debit card PINs, he says, are handled in a back-office fashion and are stored in a centralized location. With chip-and-PIN credit cards, though, the PIN is essentially coded into the card’s computer chip. You can change the PIN at an ATM, but that obviously requires an ATM that can read and modify a chip card.

“[Chip-and-signature] is a half-step,” said Jania. “The reason it is a half-step is it’s going to take some time to upgrade all the ATMs.”

According to Ericksen, if you’re not using your PIN at home, you might not remember it when you head overseas, rendering your card unusable. This is especially problematic in light of the fact that most US banks currently do not have the requisite agreements with foreign ATM operators that would allow customers to reset their PINs while out of the country, according to David Porter, the general manager of card services at JPMorgan Chase.

US Chip-and-PIN Credit Cards

Whether you buy the above excuses or not, the bottom line is that there aren’t many chip-and-PIN credit cards available to US consumers. There are some, though, including the following:

  • Diner’s Club credit cards are now being offered with chip-and-pin technology.
  • Travelex’s Cash Passport Prepaid Currency Card has chip-and pin, though it charges an unfavorable exchange rate.
  • State Employees’ Credit Union debit cards are now embedded with smartcard chips, making them chip-and-PIN capable.
  • The United Nations Federal Credit Union’s Elite Card has chip-and-PIN
  • The Andrews Federal Credit Union’s GlobeTrek VISA Rewards Card offers chip-and-PIN
  • In Dec. 2013, Wells Fargo announced that it would begin offering chip-based credit cards to consumers upon request. “Technically speaking, they are chip-and-signature,” says Weels Fargo Spokesperson Natalie M. Bowrn, “though the chip does have a PIN and can accommodate a PIN-based transaction if the situation required it (e.g. an unattended or offline kiosk.)”

Bottom Line

Chip-and-PIN credit cards are the only type of credit card that will be universally accepted in fully EMV-compliant countries, but given that there are relatively few chip-and-PIN cards being offered to US consumers, a no foreign transaction fee magnetic stripe credit card will in most cases still be the best available option for international use since chip-and-signature credit cards don’t provide much benefit relative to magstripe credit cards when used abroad.

Ultimately, there are a few key points that future international travelers can take from all this:

  • Chip-and-PIN credit cards are needed for purchases made at some unattended kiosks.
  • Chip-and-signature credit cards don’t provide much or any benefit relative to magnetic stripe credit cards when used abroad.
  • As we approach 2015, we can expect to see more chip-based cards being offered by US banks that can be used both at home and abroad.

Image: Johan Swanepoel/Shutterstock

Previous Capital One Axes Orchard Bank Credit Cards Following Acquisition of HSBC   Study: Chip-and-PIN is Broken Next
POST YOUR COMMENT
Sep 9, 2014
Photo of Colin E.
By: Colin Eldon
Last May and I was in the UK. I had my Visa card.
It was not accepted anywhere.
I tried the ATM's of four major banks....not accepted!
I went into a major bank and the manager tried on his handheld device......not accepted.
IF YOU HAVEN'T GOT A CARD WITH A CHIP YOU HAVE A BIG PROBLEM.
My USA bank says they are aware of the problem and are working on it but with no ready date available.
Aug 15, 2014
Photo of Robert M.
By: Robert Maichin
So much misleading info about this subject. Get personal experience recommendations. Rick Steves recommended the Andrews Glob Trek card as a Chip and Pin solution - IT IS NOT A PIN card that is compatible. You will need an attendant to run the card and possibly put through a fraudulent charge with the info. So far as I can tell only UN employees can get a true chip and pin compatible card in the US. Having been stuck in locked parking lots and train stations late at night I recommend always carrying a few hundred Euros to cover the days expenses. Once you do find an attendant he tells you more
Jun 10, 2014
Photo of Carmen L.
By: Carmen Leung
You forgot bmo. Bmo (harris bank) offers true pin and chip cards. Really just rebranded Canadian pin and chip cards.
Jun 14, 2014
Photo of Card H.
Card Hub
Could you please send us the link or the name of the card you are referring to because when we look at BMO Harris’ site we don’t see any credit card that uses the chip and pin technology.
May 27, 2014
Photo of Stanley S.
By: Stanley Stone
I have an Andrews FCU GlobeTrek VISA. It is not a Chip & PIN, but Chip & Signature. I have used it in Italy, the Netherlands, Luxembourg and Belgium and every time, except for once, I have had to sign. It did not work at the Centraal Station ticket kiosk in Amsterdam. I talked to AFCU and they said it was the way the merchants set up their machines, but they either don't train their customer service personnel, or just don't understand the difference. If you want a Chip & PIN, I would think twice about Andrews FCU.
May 6, 2014
Photo of Richard R.
By: Richard Robbins
I just got back from a three week trip to Spain, Italy, and Greece. I obtained the Chase Sapphire card since it was chip based. I didn't understand that it was chip - signature, not chip and pin... I now understand that I have chip and signature card. In my view it is the least secure method. In Europe unattended kiosks are in more than just train stations. When you go into a McDonald's, there is a kiosk to enter your order and pay..guess what, the chip and signature card was not accepted. When the card is accepted, the validation machine spits out a slip to sign, then another receipt. more
Aug 15, 2014
Photo of Robert M.
Robert Maichin
Richard - Do check your charges carefully. When I returned from Europe I had over $3,000 in fraudulent charges. Once you go to signature mode your data is as secure as the honesty of the waiter.
Apr 1, 2013
Photo of Mike T.
By: Mike Twohig
Chip & Signature Card. What do they mean, “a PIN is not needed”? Answer : When the merchant scans your card in the Chip Card Reader, they will see that a pin is not needed for this particular card. (Bank of America is sending me a PIN in a separate mailing, but that "offline PIN" is only used if needed for a cash advance.) If you use your PIN, you will be charged a cash advance fee. Cards with a chip and pin - the card is inserted into the card reader, the pin is put into the reader and the transaction processes. Cards with chip and signature - the more
Mar 6, 2013
Photo of Stephen G.
By: Stephen Gallagher
While visiting London in 2011, I attempted to pay with my magnetic stripe credit card. The vendor pointed to a sign on the wall saying that they only accept chip and pin cards, and luckily I had enough cash to pay the bill. When I returned home, I wrote to VISA about the incident, and VISA's response back to me was "If this happens again, tell the vendor they are required to accept your card." Somehow, I don't believe that would have worked.
Mar 30, 2013
Photo of William S.
William J Sisti
As an american who lives in london i have an UK Amex, but i prefer to use my Chase Sapphire Preferred card. Some vendors won't accept it based it is a mag swipe. I show them my ID, tell them that Visa specifically states they can't decline my card, but in reality it makes little difference. The stupidest policy so far has been my my dry cleaners where i have being going for the past year now won't take the card. WTF?
Feb 1, 2013
Photo of Anastasia M.
By: Anastasia Malden
I do not look forward to using my soon to arrive chip & signature Visa credit card in Europe where I do my traveling nowadays. The merchants over there are used to chip & PIN cards which, as the article states, is more secure than the chip & signature cards. But the main thing other than the ease for fraud is basically the same as with the old magnetic strip cards it's just that I really believe the merchants will become more confused when presented with a chip & signature card. I think it's just a marketing tool really for the bank offering it (in my case it's Chase Bank) more
Jan 15, 2013
Photo of Gee E.
By: Gee Eng
Great explanation - Amex just sent me a new card with chip and I activated it and since I'm familiar with the European system, I didn't understand why there was no provision to establish a PIN. A quick Google search brought me to this page - and I agree that this unfortunately is a half measure. During my month in France last year, I was unable to use my Amex at two general types of locations: smaller restaurants that indicated Amex acceptance and the unmanned kiosks. Knowing about this, I would make sure I had sufficient Euros - which took care of the restaurants. The new Amex will solve the more
Apr 4, 2013
Photo of Card H.
Card Hub
Thanks for the kind words. We're really sorry to hear about your predicament, but it's good that you found your way out (albeit a few Euros lighter)! Do you happen to speak French because we could certainly see things being much more difficult to handle if you weren't able to effectively communicate with the parking attendant? We'll be sure to share your story with our readers!
Aug 15, 2014
Photo of Robert M.
Robert Maichin
Thanks for sharing Gee! That was precisely my experience. I'll have to try the keep the change ploy in the future. It is ludicrous to worry about foreign transaction fee comparisons when a non working card can ruin a far more expensive vacation. We almost missed our cruise in Avignon as a result, definitely lost pleasurable hours on board. Until I get a real chip and pin card I will stick with the cruise line escorted tours and forget about saving a few hundred Euros by doing it on my own. Passengers from Brazil got their rentals in and out of the parking lots, filled with gas and returned to

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