The History of Chip and PIN

Chip and PIN technology used with credit cards was, truly, a long time coming. After all, the use of magnetic strips on credit cards is quickly becoming outdated as ingenious identity thieves have been finding ways to clone these magnetic strips and access a person’s credit card account without that person knowing – until the charges show up on that person’s credit card statement.

To help combat this problem, credit card manufacturers have developed the chip and pin technology. The history of chip and pin really dates back to smartcards, which utilize an embedded microchip. This technology has evolved for use with credit cards and allows the customer to place the credit card in a PIN pad terminal. In this way, the card never has to leave the customer’s hands. In addition, the microchip communicates with the PIN pad and verifies the customer’s purchase.

After verification, the customer punches in a four digit personal identification number, an added security feature that ensures the person using the card is authorized to make charges with it. Once this PIN is checked against the PIN stored within the microchip, the transaction is complete.

Many countries are currently using chip and pin technology or are moving in that direction. France already has a similar program in place and has cut fraudulent charges by more than 80%. Chip and PIN is specifically being used in the United Kingdom, but more than 100 other countries are quickly climbing aboard.