Chip-and-PIN vs Chip and Signature

Chip-and-PIN vs Chip and Signature

With the EMV liability shift well under way, you may feel like you can finally stop worrying about how your credit card processing is done and get back to being concerned with the other aspects of your business. However, now that we have moved past the question of chip cards versus strip cards, we now need to tackle the issue of chip and pin versus chip and signature. Which is better and why? Is there a difference in security or merchant liability? If you are a business owner, this is a question that would be beneficial for you to deal with. Let’s take a look.

What’s the Difference Between Chip-and-PIN Over Chip and Signature?

The best place to start when choosing between these two approaches to transaction processing, is to get a better understanding of their differences. Helpfully, these two options are exactly what they sound like.

For starters, chip and pin utilizes both the EMV chip card and a pin number. Chip and pin is beneficial in that it is harder for fraudsters to take advantage of you due to the fact that you are required to know a pin in order to make a payment.

A chip and signature transaction on the other hand utilizes a signature which is easier replicate making it a less secure option. As WalletHub puts it,

Chip-and-PIN is the most secure type of credit card technology. Instead of a signature being used for identity verification, it requires you to enter a four-digit Personal Identification Number (PIN) that must correspond to information contained in a computer chip embedded within the card. The inclusion of the computer chip in chip-and-pin cards makes them exponentially harder for fraudsters to replicate, and even if they do manage to get ahold of your card, they won’t be able to rack up charges with it because they’d need to know your PIN to do so.

Chip and Signature Liability

Another significant issue you will need to come to grips with when considering the choice between these two is the liability that comes with using chip and signature. Let us explain. If someone uses a stolen chip and pin card at your establishmentt and you run it as a chip and signature on your EMV terminal, you are held liable because you did not utilize the correct technology although you had it on hand. Consider this as explained by Merchant Maverick,

The bad news is, you can be liable if somebody uses a stolen chip-and-pin card at your terminal and you have to fallback to processing it as chip-and-signature. The reasoning is the same as it is for any other EMV-related change: if you had the right technology, theoretically the fraud wouldn’t have happened.

When you consider the liability risk that faces you with pin and signature transactions like the one explained above, there is a distinct advantage  that comes with chip and pin processing.


When you take into consideration the significant advantages in security that chip and pin cards hold for the customer as well as the decreased liability for merchants, the benefit falls squarely in the area of chip and pin cards. There is however some lack in implementation of chip and pin due to the deficiency in merchant’s understanding of the two. If you have any questions regarding these two forms of payment processing or if you would like to know about the many services that [Tidal Commerce][9] can offer for merchants, please let us know. We look forward to working with you soon and assisting you with all of you payment processing needs.

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