This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Chip-and-signature Cards Are Not The Same As Chip-and-pin Cards





Sarah's work as an academic involves many foreign trips, mainly to Europe, and she's gotten used to problems using her American credit cards when she's out of the country. Until recently, her U.S. plastic came only with black magnetic stripes on the back. That's fine at home, but in many other nations merchants are used to processing transactions using the on-board microprocessor chips that are universal on cards in their territories, commonly referred to as "chip-and-PIN" cards. Many merchants abroad have converted to payment terminals that no longer read magnetic strips.

Chase chooses chips

So Sarah was excited recently when she received her new J.P. Morgan Select Visa Signature Card from Chase. Not only did it come with a microprocessor chip, but it also -- in common with nine other Chase products -- charged no foreign transaction fees. She was, however, mystified by one thing: it didn't come with a four-digit personal identification number (PIN).

As it turns out, the J.P. Morgan Select product is a chip-with-signature rather than a chip-and-PIN card. That's fine in the United States, where signature authorizations are the norm, but what about in many other countries, where the use of PINs is nearly universal?

PINs -- a sign of the times?

In the U.K., for instance, people who are blind or who have dexterity or memory problems are entitled to chip-with-signature cards, even though chip-and-PIN is the country's standard technology. However, PIN-less transactions are so rare that many merchants' employees have never processed one. Indeed, a July 2012 study by the Payments Council, a British industry body that claims it "sets the strategy for U.K. payments," found that consumers are frequently embarrassed or anxious when signing to authorize a payment.



IndexCreditCards.com had an email exchange with one industry insider who should understand the implications of the signature vs. PIN debate. He observed:

Chip-with-signature technology is the standard in Asia, Germany and many other countries around the globe. It has the most universal acceptance which makes it easier for international travelers.

So, most areas should be able to process the chip-and-signature card without much issue. A French person with a PIN-enabled card making a payment in Asia can presumably always sign, but an Asian person in France without a PIN may encounter problems, especially in remote regions away from tourist areas, and when using those automated vending devices (though some reports claim that the transaction will be approved without requiring a signature).

Imagine being in that situation as a foreign tourist, especially in some other countries where you may not speak the language well. This writer has personally witnessed a tourist in a French supermarket pleading that, at home, she could sign for transactions when using her American Express card. The clerk ended the conversation icily: "Madame, vous êtes en France." (You're in France, ma'am.)

Chip-with-signature has downsides

In his email, our industry insider also wrote:

Cards that feature chip-with-signature technology do not require cardmembers to remember another PIN. Also, chip-with-signature technology is EMV compliant, meaning the chip is very secure and cannot be counterfeited.

[EMV is the technology that enables payment card microprocessor chips, and the abbreviation stands for the three companies behind its invention: Europay, MasterCard and Visa.]

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,262.56 +89.32 0.55%
S&P 500 1,842.98 +12.37 0.68%
NASDAQ 4,034.1610 +11.4670 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs