What You Need to Know About ‘Chip-with-Signature’ Credit Cards

An increasing number of U.S. banks is issuing credit cards with embedded chips that require a signature, making them compatible with the security systems used in many areas of the world, especially Western Europe. Cards with chips generally provide stronger data security than those with the familiar magnetic stripe. (U.S. cards retain the magnetic stripe, however, for use where sellers do not yet have chip capability.)

But chip implementation by U.S. banks is not the same as in many other countries, most notably in Europe. There, implementation is in the form of chip and PIN, meaning that you enter a PIN into a portable scanner to verify your transaction. U.S. cards use a chip and sign system that requires you to provide your signature, as you do with a stripe card. When you present your card, the reader on the scanner notes, “signature required.”

U.S. travelers have encountered problems using magnetic stripe cards in automatic vending devices for tickets, tolls, and such in Europe; U.S.-issued chip-with-signature cards could solve this problem. What isn’t clear yet is whether devices that choke on stripe cards will accept signature-based chip cards. On my recent trips with a U.S. chip card, I encountered no problems. Toll booths and ticket dispensers accepted my card with neither a signature nor a PIN, but then most ATMs accepted even my older stripe debit card. My trip represented a tiny fraction of possible uses, and I haven’t seen any reports about how well chip-and-sign works in widespread use.

For now, my take is that outside the U.S. you’re better off with a chip card than with a stripe card, but I certainly can’t promise your chip-and-sign card will work everywhere. We’ll report on this issue as soon as see some data.

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