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Term: Chip-And-PIN Card

14 Mar 2015

A credit card that contains data embedded in a microchip and requires the consumer to enter a personal identification number to complete the transaction. A chip and PIN card, also called an EMV microchip card, is considered more secure than a magnetic stripe credit card because of both the technology in the chip and the requirement to enter a unique PIN.

A traditional magnetic stripe card uses static data embedded in magnetic particles and suspended in plastic film; this static data is relatively easy to copy and embed in a counterfeit card. A credit card chip uses an encrypted digital signature with a non-reusable transaction code unique to each purchase, making card counterfeiting relatively difficult.

Chip and PIN cards are the same size and shape as magnetic stripe credit cards and also look similar in other ways: they contain the card issuer’s logo (e.g., Chase Bank), the payment processor’s logo (e.g., Visa), the cardholder’s name, the credit card number and an expiration date. The key difference is that chip and PIN cards, as well as their close relatives, the chip and signature card, contain a small, square-shaped microchip that’s about 0.5 inches per side. Chip and signature cards are similar to chip and PIN cards except they require the cardholder’s signature, like a traditional credit card, and do not require the cardholder to enter a PIN.

Credit cards that contain microchips can be used for on-line purchases, but for in-store transactions, the merchant needs a special credit card terminal with a slot similar to that of an ATM so the machine can read the microchip. Because this technology is still being rolled out in the United States (as of 2014), chip cards issued in the United States also contain magnetic stripes so the cards can be used with existing equipment. Some chip and PIN cards also work with near-field communication technology that lets the user pay by simply tapping the card against a terminal.

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