Chip and PIN Credit Cards

Chip cards are safer than traditional credit cards that only have magnetic stripes. The term “chip card” refers to a credit card that has a computer chip embedded inside it. The chip is the small, metallic square on the front of any recently-issued credit or debit card. When you “dip” a chip card in a reader (as opposed to swiping a magnetic stripe card), it creates a unique transaction code.

This technology is a major security upgrade from magnetic stripes. Data stored within the stripe never changes. So it’s easier for counterfeiters to copy that information and clone it onto an illegitimate card.

But it’s important to note that chip cards do still have magnetic stripes because not all merchants have card readers capable of accepting chip cards. As a result, chip cards are not as safe as they could be. The magnetic stripe could still be copied, allowing fraudsters to make purchases where a chip is not required.

Chip cards are also known as smart cards, or EMV cards. EMV stands for Europay, Mastercard and Visa – the companies that developed the new standard for card security and verification. Chip cards play a big role in that, making payments safer for all of us.

Here is why chip cards are safer:

• Difficult to clone: When you “dip” a chip card, it creates a unique code for that transaction. When you swipe a magnetic stripe, the same information is relayed every time, making it easier for someone to copy and misuse.
  
• Sophisticated encryption: Chip cards have encryption technology built right into the microchip. When a transaction happens, the chip creates a unique transaction code that cannot be used again and sends it to the issuer for verification.  
• Chip-and-signature vs. chip-and-PIN: Most chip cards distributed in the U.S. are chip-and-signature cards. They’re not as safe as chip-and-PIN cards because it’s easier to forge someone’s signature than to guess their PIN. Both are still safer than magnetic stripe cards.

Chip cards are safer than magnetic stripe cards, but the added security is only as good as the merchant’s ability to process chip card transactions. If a store does not have a point-of-sale device that’s chip-enabled, meaning there’s no slot for you to dip your credit card, then your transaction will be processed using the magnetic stripe on the back of the card. Your transaction will be less safe as a result.

The United States is currently in the process of switching from standard magnetic stripe credit cards to chip cards and chip-based payment terminals. Any new credit card you get now will have a chip in it. But most chip cards in the U.S. are chip-and-signature, not chip-and-PIN. U.S. chip cards also still come with a magnetic stripe because not all merchants have chip-card readers.

With that being said, we can expect to see more and more chip-and-PIN credit cards on the market in the years to come, as the country’s payments infrastructure continues its overhaul. They’re the most secure type of credit card, after all.  

Chase Sapphire Reserve® is not a chip and PIN card, it’s a chip and signature card. When it’s time to pay, you’ll have to insert your card into the machine (or sometimes swipe it), and then you may be asked to sign the touchpad or receipt to confirm the transaction. But you can still use Chase Sapphire Reserve most places that accept credit cards around the world, including most terminals equipped to accept chip and PIN cards. Chip and PIN is common in a lot of countries, like pretty much all of Europe, Mexico, Canada, South America and Asia. And Chase says Sapphire Reserve cards will work fine there.

Here’s how to use Chase Sapphire Reserve with chip and PIN terminals:

• U.S. terminals often require only a swipe or chip insertion. And if they ask for further verification, it’s typically a signature, not a PIN.
• If you encounter a merchant who asks for a PIN, Chase says to tell them your card doesn’t need one. 
• If an unmanned kiosk asks for a PIN, you should be able to bypass it by pressing “Cancel,” “Enter” or “Continue.” 
• If the merchant or terminal really won’t take your card without a PIN, you may have to just pay in cash or use an alternate card. 

It’s also good to note that if you’ve been a Sapphire Reserve cardholder for a long time, you could have an older version of the card that only has a magnetic stripe. If you request a replacement card, the new one will come with a chip. You can request a new card by calling Chase customer service at 1-800-935-9935 or by logging in to your online account.

A chip card is more secure than a standard magnetic stripe card because the chip is harder for fraudsters to copy. But chip cards are not all equally secure. Chip-and-PIN credit cards are more secure than chip-and-signature credit cards because it’s harder for someone to guess your PIN than to forge a signature.

Still, chip cards are not completely secure. And their security advantage over magnetic stripe cards might not affect your wallet as much as you might think.

For starters, all of the major credit card issuers provide $0 fraud liability guarantees to their customers. That means you won’t have to pay for unauthorized transactions if a fraudster ever gets his or her hands on your account information.

Secondly, all chip cards currently have magnetic stripes. This is to prevent usability issues in the United States, where chip-enabled payment terminals are not fully rolled out yet. But it also introduces security vulnerabilities. Special encoding on a chip card’s magnetic stripe makes a copied version useless at a chip-enabled payment terminal, according to Randy Vanderhoof, executive director of the Smart Card Alliance. However, that won’t necessarily be the case on a standard point of sale machine where your card is swiped.

With that being said, chip-and-PIN credit cards are the only credit cards with which you can expect to encounter no difficulties when traveling around the world. Not only will they work at offline payment terminals, but they’re also more familiar to foreign merchants, who might balk at swiping a magnetic stripe card.