PIN or Signature EMV Chip Cards: What’s the Difference?

EMV chip card close up view

EMV (Europay, Mastercard and Visa) chip card use has continued to expand in use since its tumultuous roll out in 2015. It has now become a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. Yet, while time has provided customers and businesses with more education on the security benefits of EMV chip cards, many businesses and consumers are still confused about key components.

One area that continues to cause confusion is the difference between ‘chip and PIN’ and ‘chip and signature’. So what is the difference between these two EMV chip card payment formats?

What types of EMV chip cards are there?

There are two types of EMV chip cards – ‘chip and PIN’ cards, and ‘chip and signature’ cards. A consumer using a chip and PIN card will enter their PIN to authorize a purchase. A consumer using a chip and signature card will sign for the purchase.

Currently, in the United States, most credit cards are chip and signature, while most debit cards are chip and PIN. Like magnetic strip credit cards, you sign for a purchase when using a chip credit card. When using a chip debit card, you enter a PIN just as you did with your magnetic strip debit card.

What are the costs to accept EMV Chip Cards?

At the time of this writing, there is no difference in cost to accept chip cards as opposed to magnetic strip cards. For example, if your customer uses a chip rewards card, the cost will be the same if they use a magstripe rewards card.

There can be differences in costs to process chip and PIN cards in contrast to chip and signature cards. If a customer uses a chip and PIN debit card, it may be less expensive than if they use a chip and signature card. This is due to the fact that PIN debit processing costs are often lower than credit card processing costs.

Since chip and PIN is typically only available on debit cards in the United States, it is safe to assume that chip and PIN may be cheaper as a result.

Can I run an EMV Debit Card “as credit”?

Just because there’s no difference in cost to accept chip cards vs. magstripe cards doesn’t mean there aren’t still fluctuations in costs. This is especially true when accepting debit cards, which can be authorized with either a PIN or a signature.

Many chip debit cards provide the option to skip PIN entry and run the card “as credit” instead. The cardholder will sign for the transaction instead of entering a PIN.

When running the debit card “as credit,” the transaction will be charged according to the debit rates noted in Visa and Mastercard’s interchange tables, not according to the debit network fee schedules. In some cases, it’s less expensive for a merchant to accept PIN debit cards than signature debit cards.

Related Post: The True Cost of Debit Card Transactions

When purchasing equipment or deciding on how you’ll accept cards, consider adding a PIN pad so customers can enter PINs for debit transactions.

It’s also worth noting that even though chip cards do not cost more to process by default, some processing companies impose “EMV Non-Enabled” fees for merchants that can’t or won’t accept chip cards. You’ll need to have and use EMV-capable equipment to avoid those fees.

Are there any known problems in using EMV chip cards?

Some merchants report issues with chip cards, particularly EMV PIN debit cards. Problems include terminals not requiring PIN entry, lack of cash back options when using a debit card, and terminals not permitting a customer to skip PIN entry.

There are several possible reasons for the issues, including terminals not set up correctly and customers choosing the wrong option. If your machine isn’t prompting for PINs (or requires PIN entry and won’t allow signature authorization instead) it’s a good idea to contact your merchant services provider to troubleshoot the problem.

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