Chip and PIN vs. Chip and Signature Cards

The planet’s most powerful nation is sure backwards when it comes to the payment card industry: Why has America been using 1970s technology as of the posting date of this article? That magnetic strip on credit and debit cards has GOT to go already! And thank goodness, the transition to chip technology is more imminent than ever.

For those of you out of the loop, the stripe makes it ridiculously easy for cyber thieves to commit all sorts of crimes. (Remember Target?) The chip in most cases will trip them up on this.

Chip-and-PIN technology is better than chip-and-signature. However, the chip-and-signature is taking a much stronger root in America than the PIN version. The signature version’s most obvious drawback is that it’s useless in all the other nations where PIN technology rules.

Additional Problems with Chip ‘n Signature

• A signature can be forged.
• The card can be intercepted prior to transaction completion.
• Will be very costly to convert the current stripe technology to signature—but the investment will not offset the cost due to the inherent weaknesses in signature-based technology.
• Consumers, thinking that the “chip” part of the signature version means great security, will be miffed once they realize how vulnerable signature actually is.

Benefits of Chip ‘n PIN

• The card issuer must assign the personal identification number prior to mailing the card to the user; the user must reset the PIN at a branch. Just like a debit card. Easy.
• Makes it really difficult for criminals to use a person’s credit or debit card in a fraudulent way. A most obvious example is that if a thief steals or finds a lost credit card…and tries to make a purchase…he’ll come to a dead end when it’s time to enter the PIN.

Drawbacks of Chip ‘n PIN

• Will cost an arm and a leg to implement on a universal scale, and unfortunately, funds are already being diverted to switch over to the signature technology rather than the chip.

Solutions to the Signature Problem

• To nab or prevent imposters from making that signature, certain technologies like geo-location can be implemented to determine if the customer is the real owner of the card. There’d be multiple technologies in place for verifying ownership.
• The transaction can require voice biometrics with a smartphone: The system will approve the purchase only when the card user’s voice is identified as that of the real owner.
• The second point here would be contingent on authenticating the smartphone.

But all that seems a little complicated an unnecessary. We really should just use the Chip and Signature. Or how about we just use Apple Pay!