Why I Don’t Like Credit Card Chip and PIN Technology

When I was in high school in Central California, I was on the debate team and we traveled out of town frequently. The most common destination was Bakersfield. Our team always stayed in a motel off the freeway called the “California Inn.” There weren’t individual soaps in the bathroom. Instead, there was a wall-mounted dispenser with liquid soap that was called “EuroBath.” And sixteen year-old me thought that was special stuff! It’s from Europe!

There’s this strange US fetish about Europe, not in all circles of course but in many. Anything that happens there is better, more cultured, more advanced.

That’s not just about bath products, it applies even to credit cards. Europe has moved to “chip and pin” technology where (1) the cards have a chip in them that contains their identifying data and is used instead of swiping, which is ostensibly more secure, and (2) customers enter a personalized PIN rather than just signing for a transaction — anyone can sign a name but the card’s user must enter a PIN code that also makes the card more secure.

And a certain subset of US travelers are jealous. There’s a mythology that it isn’t just cooler and more advanced, but that a card without this technology is useless if you want to travel inside Europe. Anyone not offering this technology is hopelessly behind the times.

Now, there are certain uses for having a card that matches this technology. I happen to have one myself. But it’s not nearly as necessary as is often portrayed. And it the trend towards chip and PIN isn’t even that desirable from a consumer perspective.

In the U.S. card companies have been issuing chip and signature cards — cards that don’t have to be swiped but where you still sign the charge slip. Chase especially has been adopting this technology, such as with the British Airways Visa and Hyatt Visa.

Most businesses that take credit cards accept US cards without a chip. If they have a credit card terminal, they can swipe a card using that terminal. That’s by design, if a business takes Visa for instance they must take all Visa cards. Employees may not be used to it. They may turn up their nose at it. But you can generally use a card without a chip, let alone chip and PIN.

The chip is harder to skim card information off of. And it’s harder to duplicate. Which means that in-person theft of and use of credit card information is harder, though it’s not clear that that’s how most fraud takes place anyway and though there are now machines that capture PIN codes as well.

What you can’t do without chip and PIN is use some automated kiosks. Most places with kiosks have non-kiosk options, you might have to interact with a person and perhaps wait in line. But it’s very rare that you can’t do what you wish without a chip and pin card.

Here’s why chip and PIN isn’t a trend that’s going to be great for consumers. In the US if there are fraudulent charges on your credit card you rarely have any liability for those charges. A simple phone call (technically a written submission is better to protect your rights but rarely necessary) removes charges from your bill, you have no obligation to pay the charges while the fraud investigation takes place.

In Europe, consumer protections on credit cards aren’t as strong. And with chip and PIN cards they can be almost non-existent. Because if there’s fraudulent charges on the card, there’s a presumption that the consumer must not have protected their PIN. And if they’ve not been careful with their PIN, they’re at fault and liable for the charges.

If chip and PIN becomes commonplace in the U.S., one would clearly expect the banks to lobby for similar changes.

Even though I don’t like the trend towards chip and PIN, I happen to have a PIN-enabled card. The US franchise for Diners Club was sold to Bank of Montreal and they’ve re-issued Diners Club cards and chip and PIN. I keep the card even though it’s been significantly downgraded over the years (fewer points transfer partners, no more 60 days to pay, there’s not even a restaurant benefit to the Diners Club card anymore!). I use it primarily for rental cars, since it offers a primary collision damage waiver benefit (something the United Explorer card offers also). You can’t currently apply for a new Diners Club card, though.

There’ll certainly be more chip and PIN cards coming, because there is some demand for it. And there is some usefulness. I expect it’ll take a long time before US consumer behavior can be changed, credit cards have had much broader adoption in the US and for many more decades than in Europe. So I don’t expect chip and PIN to become the standard here in the near-term. But other chip and PIN cards that I’m aware of are:

None of these cards are attractive for any reason other than being chip and PIN, however.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I have a chip and signature card here in Germany, work like a charm and retains the proof purchase with the vendor. Sucks at vending machines though. Most unattended vending machines, especially for transport don’t take chip+signature cards in Europe.

  2. I’m not sure what the situation is in all European countries, but certainly in the UK you only need to call your card issuer to flag a transaction as fraudulent and have it removed pending investigation, regardless of the authentication method.

    I’ve been using Chip+PIN for about 6-7 years, and I prefer it to signing. There’s fewer places where my signature can be copied from, and fewer places where the card can be skimmed. The number of CNP frauds I’ve experienced has dropped from 4-5 year to none.

    There was/is a strand of concern that card issuers will claim misuse of PIN to repudiate fraudulent transactions, but I’m not aware of that happening in reality.

  3. I understand your concern. But the increased liability is only there if you used the PIN for a transaction.

    I’ve got many chip & pin cards in Europe and fraudulent transactions that aren’t done through a chip&pin POS, just with signature, or online I have no liability for.

    It’s just like in the states if you say a transaction is fraudulent, but they have you on surveillance video. Let’s say with chip & pin you have increased responsibility for what you do with your card & PIN.

  4. Users of ATM cards are able to access funds solely with a PIN, which the customer is supposed to safeguard, and there is no signature required in the transaction. In cases where those ATM cards have been stolen or replicated, the banks nearly always cover the customers loss. This is true even when the customer has not been careful with their PIN.

    Chip and PIN is pretty similar to this ATM+PIN structure. I don’t really see how the usage of PIN is going to suddenly shift liability for losses to the customer, when that has not taken place in the ATM+PIN world. Chip+PIN may only be marginally better than the current signature cards, but I don’t see it being worse.

  5. The automated ticket vending machines in Rotterdam and Rome do not accept cards without chip and pin. I was fortunate to have a handful of cash Euros to buy train tickets or I would have had to walk. The staffed ticket booths, when I found one, did not accept credit cards. Only debit. With chip and pin.

  6. The Chase CSRs are really divided on their information about whether or not it’s primary or secondary coverage.

    I was told it was secondary long back…and today after reading your blog, when I called them, they STILL said it was secondary. When I asked them to make sure, they put me on hold, and then came back to tell me that it’s primary!

    :/

    P.S- thanks!

  7. I agree that Gary’s being overly paranoid here. The UK requirements spell out pretty clearly that you have to have been negligent with your PIN (and not just the card issuer alleging you were) for you to be liable.

  8. In actual fact, your neighbor to the north, Canada, has been using chip & pin for years… It’s not simply a European system. Asian markets as well are on their way through the conversion process too. Personally, I have not had my card compromised since the change to chip & pin; which is down from 3-4 times a year! Maybe you might think of joining the rest of us in using the metric system next?! 😉

  9. Also I believe that the PIN credit cards (I happen to have Amex and Mastercard versions) can also be used without the PIN part, just less easy. Else, how could online services like Paypal charge your card?

  10. In Canada we have chip & PIN for our credit cards (and soon bank ATM cards), and the liability is exactly the same as it was for simple swiped & signed transactions as before. Just as before, there is zero liability provided measures have been taken to safeguard your PIN – i.e. not writing it on the back panel, not keeping a written copy of it in your wallet, not making it your birth year, etc.

  11. Correct me if I’m wrong but Gary you seem like you want to apply European consumer “protections” to American products. Do you not think that maybe the government would step in and force banks to keep the same level of protections as they have now? I don’t see how minimizing consumer protections would go over too well with the folks in DC.

  12. Gary,

    Like the other posters already pointed out, your post is not quite on target – both factually and practically as well. Consumer banking protections are significantly stronger in Europe. This includes credit cards, and it extends to your bank accounts and data protections as well. Not to even mention how check fraud is basically nonexistent.

    I didn’t quite understand what your jab at Europe in the first paragraph had to do with the post in general. Things there are generally more cultured (this post isn’t about that, but suffice to say that 30% of the population does not disbelieve evolution like in the U.S.) and more advanced (can you send a bank transfer to any bank in the U.S. fee free with next day delivery?). The banking system is significantly more advanced. Bath products – maybe not.

    This post smells of arrogant exceptionalism that is really not realistic anymore for a country as broken as the U.S.

  13. Isn’t there something to be said about how the added protection Chip and PIN offers banks will save them money in the long run, because they will have fewer fraudulent charges to deal with, which in turn would make them more profitable and they would then have fewer reasons to do customer unfriendly things to remain profitable.

  14. I was at a train station in Narbonne, France. The staffed booths were packed up even though it was still five minutes to six in the evening.

    My only option for picking up a ticket for the coming train was to use a chip and PIN card with a kiosk. I was SCREWED.

    We got on the train and spent the next two hours avoiding the conductor by hiding in the bathroom and the dining car. Because we hadn’t bought a ticket that we had intended to buy.

    That said, chip and signature likely wouldn’t have helped us in that situation. Thanks for nothing Chase.

  15. Here in Canada we have the same pin & chip cards. It’s been around for years. Yes they are more secure and it’s nice not to have to sign every transaction.

    I accept credit cards at my shop and if I swipe a credit card that has a chip I am liable for a chargeback if its reported as fraud. Some cards will not let you over-ride the chip feature at-all. Just some insight 😉

  16. By April 2013 most US processors and merchants will be accepting chip and PIN technology cards, so it’s definitely coming!

  17. This is a complete non-issue Gary. As others have posted we have had these for years here in Canada and liability policies of the major financial institutions here have not changed at all. I’m not saying that if you bank with some minor outfit in the US, that you may not have issues, but I think you are over-reacting. No transaction is 100% safe – especially not a swipe and signature. Chip technology is more secure and convenient. And BTW, as other posters have said, your stab at the Europeans is misinformed. Don’t kid yourself, the US is way behind the rest of the world with respect to this issue and banking standards in general.

  18. @Raffles – While still married, a couple of times I used my wife’s card intentionally, and without her present while racking up minimum spend. Never once had a question from any merchant or restaurant that didn’t regularly check ID’s anyway. So merchants are just as liable for fraud.

  19. @Gary,
    “In Europe, consumer protections on credit cards aren’t as strong.” what is the source for this statement?

  20. I was under the impression that most chip and signature cards can be used in chip and PIN situations simply by entering 0000 as the PIN.

  21. I have a chip & PIN card from a major U.S. card company, issued by special request because I spend a lot o f time Europe. While it does make life easier in some situations, it certainly is not essential. That said the primary reason that I use that card brand is that there are no foreign transaction fees and the exchange rates, including Euro ATMs, are usually better than buying cash-for-cash in a major bank. I’ve never had security/fraud issues with any of my cards, but then I seriously puckered about keeping ALL cards within my sight at all times. For example, I never drop a card in the bill folio after a meal, but politely explain to the server that I will process the bill on my way out. Perhaps one in fifty gets a little snippy, but I always prevail. Again, I’ve never had a fraud or security issue, nor lost cash, cards, tickets of passport. My methods (I’m not talking…) may take an extra few seconds, but the inconvenience is better than spending a whole day or more trying to recover from a security-related event. One tip that I will share in public is to simply use cash, local currency, for the expected, minor transactions of the day. Most merchants appreciate it. Seperate from cards and other stashes, I carry enough local cash for the day’s activities in an accessable, but nearly pick-proof front pocket and access it out of sight when ever possible. I’ve had a few attempts made, but the ‘gold’ is so close to the ‘jewels’ that the perp has better be smiling when he gets that close. WHen a fleeting had does get that close, and no matter the location, I loudly scream THIEF and point. Perhaps the best security suggestion is a very general one: Always be aware of your surroundings! Before addressing your eyes to the wonderful sights and experiences around you, look at the PEOPLE that are around you and what they are doing. WIth a little practice, you’ll learn to identify potential threats – and before they target you. So, or the chip & PIN card, it is a handy convenience at times, not not essential. If you expect to need it, have i t handy, but secure. If not, keep it buried with the other essentials. Short of a violent assault, the thieves won’t get anywhere close.

  22. Another thing you can’t do without chip and pin: buy gas outside a major city on a sunday in france. We very nearly ran out of gas and had to resort to convincing some french 20-somethings to take our cash and use their card. I find that a lot of the basic activities I do in europe would be much easier with chip and pin, and I’d like to see those cards becomes more widely available here. I could do without the eyerolling when I go to use my old fashioned swipe + sign card, too. 🙂

  23. I’ve been in Europe for the last 3+ months and have switched all of my smaller transaction to cash because it’s tedious for both me and the seller for me to be “special” and have the signature to deal with (while they struggle to find their one and only pen). I don’t even carry cash on me in the US (except for in the car for an emergency) and now I find myself with pocketfuls of euro and pound coins. This has also been a pain with certain vending machines including those that dispense train tickets. I will apply for and bring a chip and PIN card for my next trip even if it means I have to pick a card I normally wouldn’t use and sacrifice rewards and fee waiving.

  24. @FBKSan and @Mike: Excellent points, especially about the self-serve fuel on Sunday! Gawd, I can remember needing fuel in Germany in the early 70s, middle of the night and the machine would take only DM5 coins – abou the s ize of a silver dollar.

  25. @Mike Michael: “but suffice to say that 30% of the population does not disbelieve evolution like in the U.S.”

    And 93% of Europeans believe every idiotic statistic made up about Americans. 😛

    Ike

  26. Ahhh, the California Inn in Bakersfield. I remember staying there one year for Nat Quals. My partner and I faced off against this team from Hoover. Gary somebody. And then our coach took us on a driving tour of the oilfields.

  27. I have a chip and pin debit card from NCSECU. I’ve also been to Germany since they switched over.

    Its not accepted as EC card. The chip doesn’t work in their system and its treated as a credit card.

    No one accepts it here or there with the chip.

  28. This is a BS policy to protect the banks interest with chip+PIN cards in Europe. All of them have the magnetic stripe anyway, so can be just as well skimmed and used to steal your money with no way to complain to the issuer.
    The cards are less sturdy as well, breaking on the chip line frequently – and banks do like to charge and additional couple Euros for a new card (since they’re issued for 3 years sometimes you can’t really wait it out for a regular replacement).

  29. @Lack: For skimming to take place you actually have to swipe the card. If you use the Chip, the card is not swiped, thus the magnetic strip cannot be copied.

    As for the chip being less strong: I’m not sure what you do with your card, but in the 10+ years that I have been using PIN (debit cards) with chip, not one has broken at that point. I have however had to replace cards for the magnetic strip which becomes harder to read over time…and had those cards always replaced for free by my bank.

  30. @Steve – Of course you cannot use US debit in Europe just like you can’t use EU debit in the US. The idea of chip and PIN credit cards is that you can use them in automated machines that accept credit cards whereas chip and signature or swipe and signature cards do to work at all in automated systems.

  31. As some previous posters have noted, we’ve had chip and PIN in Canada for some time. Overall it’s been fine but there are 2 little nuisances I’ve experienced.

    1. Signatures are no longer required for transactions under $25 to speed up service in places like the drive-thru or self checkout at the grocery store. This only works for swiping though – with my chip and PIN card I’m still handed the machine and have to complete the full transaction, slowing down service.

    2. PIN cards don’t always work overseas. When I got my first CIBC Aerogold Visa (one of the most popular reward cards in Canada) back in 2010, the PIN was often “not compatible” when traveling, a major pain since I moved to Australia for six months shortly after. The bank’s solution was to swipe, but many of the Australian merchants said they weren’t allowed to swipe a chip card. Oddly enough, the PIN worked fine in New Zealand even though the banks were largely the same as in Australia.

    I’ve largely switched to using the Amex Gold card now at home, but on more recent trips to Europe, Asia, and Australia (booked with points, of course) my Visa PIN seemed to work much more often (95%+) so the compatibility issue seems to be getting sorted. The small transaction issue is still a pain though, as I’m reminded each morning at Tim Hortons. I’ve taken to buying gift cards and using them instead to avoid having to use my PIN card.

  32. @Gary: You really should mention that most automated kiosks in Europe will do an “online PIN verification” when a US issued chip-and-sig card is used, and the cash advance PIN is sufficient to get past the PIN check. So the chip-and-sig EMV cards enable works perfectly well in most kiosks.

  33. Almost all charge cards in Canada have had chip/pin technology for a year or two (AMEX Gold is one of the last and it is just re-issuing this summer). The technology is great, primarily because most clerks don’t look at signatures but the PIN must be correct. You still have the exposure to fradulent usage via on-line purchases (which are forgiven) but for purchases in stores, restaurants, hotels the chip/pin technology takes the worry out of losing a credit card.

  34. @Gary: A bit offtopic, but I am curious what you think is the best use of Diners Club points (for those of us who still have such cards) nowadays. Alaska miles?

  35. You actually can apply for the diners club card in the US via BMO Harris Bank (Bank of Montreal’s US Bank).

  36. Hi
    I have been using a Visa Citi bank card for years and works like a charm,recently I also got a Standard Chartred Master card chip n PIN card and this card has made my life hell.I have tried to reset my PIN several times n what not,Personally I find these chip n PIN cards really irritating just like the services of standard chartred bank.

    Citi Bank for Life

  37. I would like to know if there is any way that a chip and pin card can be duplicated or skimmed? This is for a mastercard. I know someone that has a mastercard and someone took out cash advances over a period of 4 days until he noticed and my friend still had his card with him.

  38. I realize I’m chiming in 1 year after this article was released, but I recently picked up the Chase Marriott Premier card (annual fee, but nice benefits).

    I prefer AmEx, but this card seemed like a nice backup for places that don’t take my AmEx and for travel (due to the chip). However, to my own fault/oversight) I did not , realize that I was getting a mere “chip and signature” card (as I assumed the visible chip would get me “chip and pin” compatibility and actually just assumed that “chip and signature” was a Euro/US English translation issue).

    Given the above, I wrote to Chase asking for “chip and pin” while a friend/coworker who also got the card made a call. My friend was advised that the “press CONTINUE” or “Enter 0000 as your PIN” options should work in general. According to Chase, the only country where people typically have kiosk issues with a “chip and signature” card is Spain.

  39. What you’re saying is actually incorrect. Credit card companies don’t assume liability only if the customer uses a PIN that is EASILY guessed by a thief. E.g, “1234”, “date of birth”.

    Chip & PIN is better and safer technology, chip & signature is a move in the right direction but doesn’t go far enough. Australia is moving to chip & pin on August 1st.

  40. @William Charles – I think you’re misreading what I wrote, credit card company liability is ingrained in US law. But chip and pin creates an argument for a liability shift which has happened in Europe already.

  41. Or maybe William Charles is reading correctly, they just think you’re misleading?

    As many other respondents have said, your claims about liability shift for consumers in Europe are misleading. Firstly in many case for consumers there was often no real legal liability shift initially. E.g. there’s a myth it happened in the UK. Actually as I understand it is the law or even the regulations remained the same. The problem was that it didn’t provide sufficient protection in the case of PIN.

    In many countries (don’t know about the US), you have always had liability if you were sufficiently negligent. When it comes to signatures, it’s difficult to argue that you are negligent in letting someone forge your signature since it’s accept we use these all the time so it’s easily possibly for someone to get a copy and learn to forge it.

    With PINs, since you’re supposed to use a unique and sufficiently unguessable PIN, and safeguard entry, in some places including the UK it’s true banks did automatically argue you were negligent if your PIN was used. This is of course difficult to counter.

    What often happened, and did in the UK was a pushback either legal or otherwise. So now, the banks actually have to prove you were negligent, they can’t just say “since someone used your PIN you must have been negligent”.

    In other words, the liability shift has usually been in the opposite direction, to offer further protections for consumers that weren’t there before PIN came in to play because they weren’t an issue before PIN.

    (Even this isn’t so simple. I believe there was sometimes similar problem in the early days of credit card skimming/cloning since if it’s a card present transaction and the signature did match, the bank would argue you clearly approved the transaction. If the fraud was done locally, unless you could provide evidence you were somewhere else, you would often be SOL. Of course many times the signature wouldn’t match since the fraudster had no reason to bother. The merchant didn’t know what the signature held at the bank was like, only the signature on the cloned card, still I think it did happen since criminals didn’t always understand such details. In any case, as such skimming became more common and more international, this became more difficult for the banks.)

    Cheers

  42. For several years I have fought with my credit union: Navy Federal Credit Union(largest in the U.S.) to issue chip and pin (not signature) VISA cards. This past year they did. No longer do I fear unattended gas stations, ticketing kiosks or parking garages. Nor do I have to argue with retail establishments about allowing for my signature.

    Chip and signature is a joke. I cannot remember the last time anyone looked at my signature on my credit card. To this day, I still sign my U.S. transactions with a smiley face. Since October any retailer in the U.S. that accepts a fraudulent transaction without a chip, owns the loss. I even mention it to retailers and they don’t care! Even after I signed it with a smiley face, they accepted it.

    As for consumer liability, you truly don’t know about what you are saying. Europe has been taking chip and pin for 10 years. No consumer is liable in the case of fraud. Same goes for Canada. There is much less fraud with chip and pin.

  43. Who over wrote this is a very big silly.. Why you ask? Two of my US major credit cards switched to chip and pin for any merchants accepting. They advised in the Terms and Conditions that Zero liability applys to Chip and Pin also. Discover Card just announced Chip and Pin plus keeping zero liability too.

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