How are PIN numbers being used with credit cards with chips?

How are PIN numbers being used with credit cards with chips?

CHARLOTTE, NC (WBTV) - Many people have been asking about an additional security measure for credit cards after WBTV reported on the new technology that's making credit cards more secure.

More specific questions that are being asked are why aren't PIN numbers being used with the new chip cards?

Not all PIN numbers are the same when it comes to cards and there has been some confusion as to how they're actually used.

With your debit card, you are able to pick your PIN number.  That's what's referred to as an online PIN number which is validated by your bank when you use your ATM or debit card. With a chip credit card, a PIN number is actually assigned to the card and it's stored inside the chip in the card, which is then called an offline PIN number.

Does this sound a bit confusing?

Many credit card issuers believe the use of offline PINs are going to be confusing for consumers, particularly if you have two different PIN numbers on one card. An example of this would be if you had a card that you can use as a debit and credit card.

For several reasons that can be somewhat complicated, your signature instead of your PIN number is used to validate most of your transactions which is what most consumers use currently.

But there's also another factor in the use of PINs and credit cards.

"Chip technology helps prevent counterfeit fraud.  That is fraudsters take stolen card information (from data breaches) and encodes it onto fake cards to use for fraud in physical stores," a spokesperson with VISA told WBTV.  "When we began the migration to chip, counterfeit accounted for the majority of card fraud in the U.S., followed closely by "card not-present" fraud which is ecommerce and mail/telephone orders."

"PINs address lost/stolen fraud, or when the real card is no longer in the cardholder's possession (e.g., from pickpocketing)," the spokesperson said.  "That is a relatively small portion of fraud and one that has not been growing for some time.  VISA supports multiple ways to verify the cardholder including PINs but did not make it a requirement with chip transactions.  Card issuers and merchants can continue to choose whether they accept PINs."

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