Chip and PIN - What is chip and PIN?
Chip and PIN refers to the technology used in debit and credit cards in order to process payments or to withdraw cash from from cashpoints
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The term ‘chip and PIN’ refers to the microchip found in credit card that is used in conjunction with a confidential PIN (Personal Identification Number) code known only by the cardholder in order to validate use of the card to make a payment.
How chip and PIN works
In many countries, current credit and debit cards contain a microchip. This chip is embedded with details about the cardholder’s associated account. The data includes:
- The cardholder’s name
- The account number
- The expiration date of the card
- The 3-4 digit security code on the back of the card
This information makes it possible for the hardware and software necessary to process a transaction such as payment for products or services, or the withdrawal of cash from a bank’s ATM.
Chip and PIN in sales
A point of sale system will have hardware that enables a device such as a card reader, to “read” this information. The PIN provides an added level of security - an upgrade from older credit cards that used the magnetic stripe combined with a signature (that will match the cardholder’s signature on the back of the card) on a printed sales receipt of the transaction.
The card reader can then put the payment amount through a payment processor and the transaction is successful if there are sufficient funds on the account
The information collected from the card allows the amount specified to be deducted from the cardholder’s account and credited to the seller’s account. This allows for a fast an easy exchange of funds in the sales process.
Chip and PIN for withdrawals
The chip and PIN is also used to allow a cardholder to access funds in their account at an ATM and withdraw cash. The machine follows the same process by reading the card and distributing the cash if there are sufficient funds available in the associated account.
Why chip and PIN is good for businesses
The chip and PIN method does provide the cardholder with an increased level of security as compared to the swipe and signature method, but it also contains some benefits for businesses accepting card payments including:
- Lower risk of fake or fraudulent cards
- Reduces responsibility for authentication of cards (comparing signatures)
- Speeds up the process
The chip and PIN technology provides increased security overall on both sides of a transaction.
Debitoor & chip and PIN
Debitoor’s integration with SumUp means that you can now use a card reader to allow customers to pay by card with chip and PIN and see those payments transferred directly to your Debitoor account.