ST. PETERSBURG, Fla.-As EMV moves closer to implementation in the U.S., there is some debate over whether chip and PIN or chip and signature will emerge as the preferred card technology.
With chip and PIN, consumers insert their card into the payment terminal and then enter a PIN. With chip and signature, the card is verified at the terminal, but then the individual simply signs-merchants then are encouraged to check a form of ID to verify cardholder identity. Payments experts agree that chip and PIN offers greater security, while chip and signature is less expensive to implement because less configuration time and less testing are required.
But other choices face potential EMV issuers. There are two primary types of chip and PIN cards, those that have the PIN encoded within the data stored on the card, called offline PIN, and chip cards that must connect with a financial institution's database to verify the PIN, called online PIN.
Offline PIN is used widely in Europe and overseas where many merchants' POS terminals are not connected to financial institution's databases, as is the situation with kiosks at transit stations. However, since most merchants in the U.S. have terminals online with FI databases, online PIN may be the preferred method stateside, sources suggest.
A Layer of Complexity
Kenton Potterton, VP of product management for card payments at PSCU here, said he favors chip and PIN because of the additional form of authentication, and he likes the acceptance flexibility of offline PIN. However, he said supporting offline PIN is more difficult than online because when a cardholder's PIN is changed, it has to be changed on the card as well as the mainframe. With online PIN, a simple change is made in the issuer's database.
"With offline PIN, you have to find a way to push that new PIN to the card," said Potterton. "There is a way to do that, but it adds another layer of complexity and costs. And, to handle the updates the card itself has to have more memory on it, which adds a little to setup and plastics costs."
Mark Rennie Davis, senior payments consultant at MasterCard Advisors, New York, said that while most U.S. merchants should be able to accommodate online PIN, uses for offline PIN could emerge, such as at transit stations or for vending.
