Both types of chip cards use EMV verification. And both are generally thought to be more secure than the standard magnetic stripe credit cards that have been used for decades in the United States. But there are some differences.
- Chip and PIN credit cards rely on an embedded computer chip that corresponds to a personal identification number assigned to each cardholder. For a payment to be authorized at a merchant with a chip reader, the user must insert their card into the payment terminal and input their PIN.
- Chip-and -signature cards also have computer chips but lack a corresponding PIN. Rather, you will simply have to sign for purchases, whether you swipe your card or “dip” it into a merchant’s payment terminal.
With that being said, the biggest difference between the two types of chip cards
involves so-called “offline transactions.” This may include purchases made at unmanned kiosks, such as ticket machines in train stations or parking garages. It can also come into play with merchants in rural areas where telecommunications costs are high.
Chip-and-PIN cards work for these transactions because your PIN can be cross-referenced against data stored on your card’s computer chip to verify your identity. In other words, the payment terminal doesn’t have to contact the financial institution that issued your card for the purchase to go through. But chip-and-signature cards don’t work for such transactions because they require communication between a payment terminal and a card’s issuer.
Finally, it’s worth noting one important similarity between chip-and-PIN and chip-and-signature cards: They both still have magnetic stripes. This helps promote usability in areas that have yet to become fully EMV compliant.