What is Chip and Pin?
Chip and Pin is a technology that facilitate transactions through credit or debit payment cards worldwide. It was designed by Europay International, Mastercard International, and Visa International. Chip and pin payment cards are characterised by the presence of a microchip that stores the data. The chip contains the cardholder’s bank account information, and payments can only be made after entering their 4 digit PIN code.
This system, called EMV Card Payments System, was introduced in Europe in 2005 and the U.K. was one of the first countries to introduce chip and pin cards. The effective releasing day was the 14th of February 2006, which means that this is the 10th year since the introduction of this safe method of payments.
In fact, from that point on, cases of fraud began to drop almost immediately. Indeed, in order to activate the card, the cardholder’s signature is not enough. It is necessary to be able to provide the exact 4 digit PIN code to authenticate the purchase. In the case of chip and pin cards, the customer needs to insert the side of the card with the microchip into the chip card reader and successfully enter the correct pin code, which usually consists of 4 digits.
If by chance the shop does not provide a chip and pin card reader, the transaction can be confirmed by signing your signature, as is the case of magnetic stripe cards. Indeed, next generation chip and pin card readers have the possibility to carry out the transaction with different types of cards, such as chip and pin, chip and signature, magnetic stripe, and contactless.
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How to Use Chip and Pin?
Chip & pin technology enables a more secure transaction. When the checkout assistant receives a chip and pin card, it must be placed into the pin pad or terminal. Then, the screen of the terminal will request the cardholder’s 4 digit pin (Personal Identification Number).
This process can be different from the chip and signature cards, which simply requires a signature instead of a pin. When the purchase has been completed, thanks to chip and pin technology, the merchant is shielded from any possible complaint from customers who might claim that the transaction was not authorised.
What Are the Different Types of Card Payments?
Chip and pin card readers have the possibility to work with different types of card, allowing your business to provide the best buying experience to the customer. Having a chip and pin card reader eliminates the problem of incompatibility between card reader and the card itself.
The most used types of cards are the following:
Contactless cards employ radio-frequency identification (RFID) or near field communication (NFC) and a specific chip and antenna in order to enable secure payment. The pin pad will not require the cardholder to enter the pin unless the purchase amount exceeds the maximum amount allowed by contactless transactions, in which, the customer again has to enter their pin to complete the transaction. This way payments are quicker and more efficient. The countries that are using contactless cards have set a limit in order to reduce the risk of fraud, as this is still a new technology.
The “floor limit”, or the maximum amount to use contactless payment without requiring a pin code, varies from country to country.
|Australia||No limit||Pin required for transaction over A$100|
|Canada||No limit||No law limiting the amounts|
|China||CNY ¥300||UnionPay QuickPass|
|India||RS. 2000||Chip transaction is required over this amount|
|Ireland||€30||From 1st of October 2015|
|New Zealand||No limit||Pin required for transaction over NZ$80|
|Turkey||50 TL||Pin required for transaction over 50TL|
|United Kingdom||£30||From 1st of September 2015|
|United States of America||US$25||US$50 is also a very common limit|
Chip and Pin cards are a standard-size plastic card in which a microchip and the traditional magnetic stripe are present. In this case, the card is inserted in the chip card reader, and it will ask for a 4-digit pin code in order to carry out the transaction. Chip and signature are also part of this group, even though they require a signature to authorise the purchase, instead of the more secure pin code.
Magnetic stripe cards are the oldest type of payment card.They have the possibility of storing data thanks to the magnetic strip positioned on back of the card. It can be used by simply swiping the magnetic stripe through the card reader. In order to approve the purchase, the checkout assistant must ask for a signature and check if it is the same as the one written on the back of the card.
Advantages of Chip and Pin Card Readers
As mentioned earlier, chip and pin solutions increase the security of transactions, thereby reducing the risk of fraud. Moreover, another important point is the versatility of the chip card readers employed, not only for chip and pin cards, but even for the newest contactless technology and the older magnetic stripe cards.
In this way, the merchant will not be obliged to refuse a purchase to their customers just because the shop does not provide the right payment technology. In fact, with the increasing variety of payment methods, it is important to keep your business up to date in order to allow every single client to make payments in their preferred way.
How to Choose the Right Chip and Pin Card Reader?
When you are looking for the right chip and pin solution for your business, you should consider, in detail, the requirements of your business. How many times per day are you using the pin pad? What are the most used cards when making payments? Do you need a chip and pin card reader only on specific occasions?
In fact, if your business operations take place at a small café or a stand, you might prefer something more practical and easy to connect to your mPOS system. On the other hand, if you own a supermarket, a restaurant, or a shop, you will probably need a faster and multi-dimensional solution.
In your decision making process, you can also consider the various brands on the market.
The following are some of the brands that sell chip and pin card readers:
What is the Cost of a Chip and Pin Card Reader?
According to the selected brand and business needs, the chip and pin card reader prices will differ. In the U.K., the price of pin pad readers ranges from £30 to 200£.
|Types||Estimated Costs||What to consider|
|Buying Cost||from £30 to £200||The type, quality and reliability of the machine|
|Monthly Cost||£20||Minimum usage limit is fixed at a price|
|Usage Cost||2-5 % of the transaction price||Depends on the amount of payments processed|
|Contract Cost||might go up to £200||Depends on length and flexibility of growth in operations|
As for EPOS solutions, you can decide to rent a chip and pin card reader if, for example, you do not want to invest money in it or you only need it for a certain period of time. In this way, you can take advantage of the savings you gain from not having to pay for maintenance out of pocket. Instead, maintainance is often provided by the supplier, so you don’t have to worry about it.
What is EMVCo?
Chip and pin cards are also called EMV cards, since they operate using the EMV Card Payment System. This was initially created in Europe by Europay International, MasterCard International and Visa International. Since 1999, when it was instituted, EMVCo had the aim to regulate and facilitate the interoperations and acceptance of payments worldwide.
Today, six organizations are cooperating with EMVCo: American Express, Discover, MasterCard, JCB, Visa, and UnionPay. The group is run by the Board of Managers which consists of two representatives from each company, and is supported by several banks, merchants, vendors, and other industry stakeholders.
Do you want to provide your customers with the perfect purchase experience? Let Market Inspector help you find a new chip and pin card reader to reduce the checkout times. By filling in the form on this page, you will receive up to 4 free quotes from our suppliers. All you have to do is decide which chip and pin solution fits your business needs the best.