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The Purpose of Chip & PIN Technology

Posted October 05, 2016 9:32 AM by HUSH

Is anyone else annoyed by chip and pin/signature technology? Buying anything lately feels like a real pain.

After the person ahead of me completes their transaction, it becomes my turn to struggle. It begins by swiping the magnetic strip and the reader buzzing. “Please insert card into the chip reader.” Ok, I do. But then I either remove it too soon because the screen flashes, or I outright forget the card while I’m grabbing my bags or packing the shopping cart. The cashier (who has learned POS does not represent point-of-sale in this instance) resentfully reminds me of the card, before handing over the receipt and beginning the sequence anew with another shopper.

Sure, these are trivial annoyances, but was the old ‘swipe the stripe’ system that flawed? It supposedly protects my identity and accounts better, but the only time they were ever stolen was because of the credit card company’s data breaches anyhow.

We know it as chip and pin technology, but technically they are called EMV cards after the three brands that worked together to create the technology (Europay, Mastercard and Visa). The consortium wanted a way to reduce credit card fraud, and locating an integrated circuit within the credit card was deemed to be the solution.

Did you know cashiers have the responsibility to check for the correct hologram on non-EMV cards? Cardholder identity checks were also supposed to be performed by comparing the card’s signature to the signature on the receipt. (This is why some folks write “see ID” on their signature line—and many times their identity still isn’t verified!) Yet I don’t think either of those ever happened, and because credit card companies were on the hook for fraudulent charges, they ultimately felt a card redesign was necessary.

The security upgrade stems from the fact the chip on modern credit cards is much harder and more expensive to duplicate. This chip also contains card and account information that must be read and processed by the card reader’s software, which is why the card must remain in the card reader for a few moments longer. When magnetic stripes were first introduced on credit cards in the 1970s, they too were cutting edge technology, but today a stripe reader/writer can be had on the Internet for less than $100.

The chip also communicates with the card issuer’s network to co-create a one-time transaction approval code, so if hackers steal transaction information, they cannot use the account numbers to make phony charges.

Also, most of the world that has upgraded to EMV cards—the U.K., Ireland, Canada, France, Finland, the Netherlands— and prefer to use PINs instead of signatures, which the United States still does, along with Mexico, Germany and the Philippines. In fact, the U.S. is well behind the curve on EMV technology, as it has been rolled out in Europe for over a decade.

What caused the sudden exodus to chip and PIN technology in the U.S.? As of October 1, 2015, credit card issuers will no longer take responsibility for fraudulent purchases, and the onus will be on the retailer for using outdated technology. It is expected that sometime soon all purchases made by credit card will require the chip, and the magnetic stripe will be phased out.

While EMV is drastically reducing potential fraud, it is also saving the credit card companies from having to cover fraudulent charges, which was the primary motivation in the switch to EMV. Yet keeping the magnetized strip, even for now, basically makes chip and PIN technology useless. It can still be easily duplicated, and any time a striped card leaves a wallet is a chance for copying the magnetic stripe.

So while I roll my eyes in the checkout line, I should at least be grateful it isn’t the 1960s, when the clerk would check my card’s status in a printed manual, call the company if it was a large purchase, and then make a carbon copy on flatbed card imprinter. Those were the days…

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#1

Re: The Purpose of Chip & PIN Technology

10/05/2016 7:11 PM

Those were STILL the days well into the 1980's.

I remember I would use cash for any purchase less than $20.00 because of the hassle of using a credit card. Now I can use my credit card to buy a soda out of the machine.

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#2

Re: The Purpose of Chip & PIN Technology

10/05/2016 7:24 PM

It amazes me there is as little credit card fraud as there is. You can guard the numbers on the card, but in order to use it, you have to give all that information to the vendor, so where is the secret?

http://dilbert.com/strip/1996-01-11

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#3

Re: The Purpose of Chip & PIN Technology

10/06/2016 7:22 AM

I'm surprised you are annoyed by a fraud prevention system that easy.

It's in use since ages in Europe and we feel unconfortable with the simple swiping and the money is gone.

The chip - pin system makes your card useless in case it get's lost or stolen, and the technique of copying the magnetic strip and logging keystrokes also does not work.

The credit card fraud is rather high, they just don't tell you.

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#4

Re: The Purpose of Chip & PIN Technology

10/06/2016 1:31 PM

I have only used the chip technology once (yesterday). Since it is more secure, I am definitely not annoyed. The swipe system has not worked on several occasions. That did annoy me.

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#8
In reply to #4

Re: The Purpose of Chip & PIN Technology

10/07/2016 5:24 PM

Chip and PIN has been in widespread use in Japan for years .

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#5

Re: The Purpose of Chip & PIN Technology

10/06/2016 3:26 PM

The thing I am most annoyed about is how the guy in front of me in the check out line even though he has had a chip embedded debit card for over two years now still can't figure out how to use it like he never read the instruction booklet.

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#6
In reply to #5

Re: The Purpose of Chip & PIN Technology

10/07/2016 9:27 AM

. . . much less the real time instructions on the screen, and the annoying beeps reminding you to remove the card. The worse part is realizing which system to use when checking out.

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#7

Re: The Purpose of Chip & PIN Technology

10/07/2016 9:36 AM

if the reader requires the chip to be used if you have a chip in your card, you do not need to swipe then insert. Just insert.

Unfortunately, some readers don't have insert, or some vendors have readers with insert, but do not have the correct infrastructure, and have a placard that usually says something like, "Please swipe card" .

So, I look slot first, and bypass swipe.

Also, there is some confusion among vendors about debit card with chip requiring pin versus credit card with chip. You can insert debit card with chip, it will ask for pin, or you can insert credit card with chip and it will not.

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#9

Re: The Purpose of Chip & PIN Technology

10/07/2016 6:43 PM

Gee, remember that Visa card commercial about 2 years ago showing how much faster it was to go through the cafeteria checkout line with a Visa card than by paying cash?

HA!!! I stood in line a WalMart for 5 minutes because the stupid card reader couldn't read the card of the lady in front of me. She finally gave up and offered cash, but there was a problem with that--they had to call a manager to take cash! I gave up and moved to another line...

What do you do when the chip FALLS OUT of the card, like it did on my boss's card?

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#10

Re: The Purpose of Chip & PIN Technology

10/07/2016 9:31 PM

We've had this for years up north here. Now most cards have a tap feature for smaller purchases that is a big timesaver.

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#11

Re: The Purpose of Chip & PIN Technology

10/10/2016 10:54 AM

I've had my credit cards replaced a number of times, mostly due to "data breaches", but one time the credit union called me to ask if I'd purchased gasoline in Mexico. Of course, I hadn't and my card was in my wallet, but it was somehow cloned.

I asked if they couldn't track down the culprits, knowing where they had charged. The answer was that it was cheaper to just write it off than to pursue legal action.

I guess it's better for the criminals as well, committing a crime for which they are unlikely to be punished.

I'm all for increasing security, chip + pin, anything to stop supporting crime.

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#12
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Re: The Purpose of Chip & PIN Technology

10/10/2016 11:28 AM

I've had mine closed and replaced two or three times. Sometimes they caught it, but one time I did when i noticed $997 in three charges that weren't mine. I did some research and found they were located within twenty miles from an online pet food company. I reported the details to the company and the credit card company. I never did find out what they found.

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#13
In reply to #12

Re: The Purpose of Chip & PIN Technology

10/10/2016 1:45 PM

My wife and I discovered someone using stolen credit card information when we purchased some software from Ebay that was brand-new but somewhat below cost. That was the first clue something was amiss. Turns out the Ebay sale was direct shipped from the company, so we were able to track it back, found out who the true owner of the credit card was and called them on the phone to let them know. They thanked us as they just wondered why they had unauthorized charges. Turned over all the information to Ebay, the FBI and local police, but I'll bet nothing much happened because "it wasn't enough money".

I agree. In these cases prevention is much more effective than prosecution although I'd love to hang these bastards from the highest yardarm.

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#14

Re: The Purpose of Chip & PIN Technology

11/15/2016 12:23 AM

I am in favor of this POS PIN technology. Normal magnetic cards can be easily hacked just like a RFID tag. ATM skimming is also used to hack these old magnetic striped CC cards.

Chipped cards are free from such "non- contact" attacks. Also what I believe is that skimming is also not possible in case of chip cards. Chips always provide an extra layer of security, while reading this blog , I searched for a security of such cards. This news from Hacker news states that Skimming is also possible in case of chip cards.

http://thehackernews.com/2016/08/hacking-chip-pin-card.html

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