By now you’ve surely heard about the EMV shift that has been
well underway in the United States for the past year. However, you might not be
aware of the differences between the two different types of EMV transactions:
chip-and-PIN and chip-and-signature. Here, we break down those types of
transactions and weigh their pros and cons.
Chip-and-signature EMV transactions
Chip-and-signature is the most prevalent form of EMV
transactions in the U.S. Most banks and other financial institutions offer
chip-and-signature EMV cards as their “go to” EMV card type. Chip-and-signature
cards contain all the key characteristics of EMV technology, including:
A magnetic stripe
Fraud protection
Widely accepted by EMV terminals
What’s more, the chip-and-signature EMV process is quick,
easy and familiar to credit card users: Simply insert the card into the
terminal, allow the transaction to process and sign for your purchase. However,
this does leave some wiggle room for fraudsters. While only one person—the
authorized cardholder—should know his or her card PIN, anyone could
theoretically forge a signature in a chip-and-signature transaction.
Chip-and-PIN EMV transactions
As you may have guessed, the chip-and-PIN card transaction
is the more secure type of EMV transaction. In fact, the chip-and-PIN EMV
transaction is considered the ultimate in modern payments security. This is
because it is much more difficult, if not impossible, to “forge” a PIN versus
the ease of forging a signature. If the customer doesn’t know the PIN, the transaction
can’t move forward—stopping a would-be fraudster in his tracks.
Another benefit of chip-and-PIN cards is that some EMV
terminals only accept chip-and-PIN EMV cards. So, armed with this type of EMV
card, you can be sure to be able to make a purchase wherever you’d like to do
so.
EMV migration marches on steadily
Business Insider reported that only 2 percent of U.S.
card-present transactions were EMV compliant in 2015. This lag in adoption was
attributed to card issuers (banks) reissuing volumes and trends and timing of
merchant payment terminal upgrades to EMV technology. However, by summer 2016,
MasterCard reported that 80 percent of their roughly 195 million U.S. credit
cards now have EMV chips. Visa, the largest credit card company in the U.S.,
estimates that 75% of their U.S.-issued credit cards will contain EMV chips by
the end of 2016.
Whether EMV transactions are of the chip-and-PIN or
chip-and-signature variety, the added security of this technology is making the
world a safer place for using and accepting card payments. If you haven’t
already, work with your card processor to make sure your business is fully EEMV
compliant so you can start accepting EMV transactions today!
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