Pin is Mi g htier than Pen

Chetan kashyap, London, UK

Say goodbye to signing your credit card slips!! As the pen makes way for the Pin in a new scheme, beating high street fraud is now a hi-tech challenge.
Shoppers who pay for their goods by card rather than cash can forget about signing on the dotted line in future. Instead, we will be asked to tap out a Pin number to authenticate the card. Crime and Fraud in this sector grew by 15% last year, accounting for losses of £110m. Usually card details are taken from discarded receipts or copied down without the cardholder's knowledge. Cloning credit/debit cards has been a source of nightmare to the payment industry. Millions and millions of dollars are s pent each year to combat fraudulent transactions and identity theft. More intelligent software/applications are been used to prevent this. But unfortunate ly, the growth in this area seems to be higher and higher.

Don’t you feel scary when the waiter in the restaurant takes your card to swipe for payment - A potential fraudster can eas ily copy your details and clone within few minutes!! These will all be gone wi th the new CHIP and Pin card. A chip/microchip embedded on the credit/debit card holds the same personal data as a magnetic stripe - cardholder name, number, expiry date - but can lock it in more effectively, using sophisticated encryption. You need your PIN (issued by your bank) to pay for goods and services at shops or businesses. Sometimes you may not be able to sign a receipt to make your payment. If you do not know your PIN, you may be asked to pay using an alternative method. How this works:
When you pay for goods and services, your card will be inserted into a special terminal. These terminals are different than ones used today.
After checking the amount, you will enter your four digits PIN into a keypad
We, in India are yet to get into this Chip/Pin Bandwagon. Most of United States, Europe and United Kingdom have made it mandatory to implement this system. You have to use PIN while shopping in these countries. Some of them accept signature on charge slips but most do not. Many other countries around the world are also planning to implement the chip and PIN system.


The machine will check the PIN you entered against the PIN held on the chip in your card (just as your signature on a receipt is checked against the signature on your card today). For the transaction to complete there are two methods used these days (a) offline and (b) online. With the offline, the local terminal has the capacity to check/verify the entered PIN locally before the request for authorization is send. While with the second “online” method the PIN details are verified by your bank or the service provider involved within the transaction.

You will be given a receipt for your purchases. Although there are more additional costs involved to implement this technology by all involved i.e. merchants, acquirer, issuer, service provider, some points need to be remembered:

(a) The merchants have to invest for the new special terminals

(b) The acquirer switch has to process additional chip data (c) Service provider has to change his switching mechanism to cater to the pin data;

Implement stronger encryption mechanism and keys.

(d) Issuer has to bear the costs for the micro-chip on card and also make necessary changes in the software.

Now let’s see who will benefit from this and how: (a) End-user (Cardholder): - Prone to lesser fraud - Sense of more security while using card. - More secured Travel and Entertainment transactions

(b) Service Providers: - Less headache on frauds - Authority for more secured transactions - Combat Card Crimes So, the next time you get a Credit/Debit International Card from any bank in India, check if you have one CHIP/PIN card – else you may not be able to shop internationally!!
About the Author : He is by profession a Senior Engineer working at VISA International, London, UK. Email ID:



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