Chipless and pinless

Magical microprocessor.

Magical microchip.

I’ve been making a lot of purchases with my debit card lately. Because, as I quickly realized upon returning to the US, nobody pays with cash anymore (although checks seem to stubbornly persist).

Sure, paying with your debit card can make life easier because you’re not required to carry cash around with you all the time. But, what’s with all this signing of receipts? In the US, when you pay for something with your debit or credit card, you often have to put pen to paper and sign to authorize the payment.

That’s not the way it’s done in the rest of the world. In fact, it’s a totally outdated technology. The US is the last major market to use the old fashioned swipe and signature system. In the UK, France, the Netherlands, and all the other European countries I’ve been to, debit cards use a so-called “chip and pin” system, also known as EMV cards (Europay, MasterCard, and Visa) or “smart cards.”

They’re smart because they have microchips embedded in the card which authenticate your identity in conjunction with your personal identification number (PIN). The microchip just looks like a small silver or gold square on the front of the card. But it makes life so much easier. Rather than swiping your magnetic stripe card and then signing a printed receipt to prove you’re you (or some fraudster forging your signature), you just insert your SMART card into the card reader and then enter your PIN into the payment device. Voila, payment complete! No paper, no signing. Ta-da.

In Europe, all merchants have the equipment to process chip and pin payments. At supermarkets, it’s usually a device fixed in place at the checkout counter. At restaurants, it’s a handheld device that the waiter or waitress brings to your table to stick your card into and hand to you for PIN entry. In recent years in Europe, this has been further evolving into contactless payments, where you just tap the card against the reader without even entering your PIN (this is usually limited to smaller payments).

And here we are state-side, writing checks and signing receipts… and I have a chip on my shoulder about it. (Yes, pun intended.)

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Filed under Banking, Money, Practicalities

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