Chip and signature means an EMV chip card transaction in which you verify the purchase by signing when the transaction requests cardholder verification. The chip handles the payment transaction; the signature is one possible way to verify that the person using the card is its cardholder.
What does “chip and signature” mean?
The phrase combines two separate parts of a card payment:
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- Chip: the embedded payment chip used in the transaction.
- Signature: a cardholder verification method, or CVM, used when the transaction calls for verification.
So “chip and signature” does not mean that signing creates the chip’s security. EMVCo describes signature as one of several available verification methods, while the Federal Reserve Bank of St. Louis explains the chip’s role in processing a payment.
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How is chip-and-signature different from chip-and-PIN?
The key difference is how the cardholder verifies the purchase when verification is requested: signing versus entering a PIN. Both can use the same EMV chip technology, according to American Express.
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| Payment term | Cardholder verification when requested | What the term describes |
|---|---|---|
| Chip-and-signature | Sign | An EMV chip payment with signature-based verification |
| Chip-and-PIN | Enter a PIN | An EMV chip payment with PIN-based verification |
This distinction describes the verification method, not a universal security ranking. The exact verification method available or requested can depend on the card, transaction setup and market.
Does every chip payment require a signature or PIN?
No. A chip transaction does not necessarily request either one. EMV specifications support multiple cardholder verification methods, including online PIN, offline PIN, signature and no verification; which methods apply varies by market. A terminal’s prompt is therefore not determined by the phrase “chip and signature” alone.
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For a particular purchase, follow the terminal’s instructions. It may request a signature or PIN, or it may complete the transaction without asking you to verify in either of those ways.
Is contactless the same as chip-and-signature?
No. Contact and contactless describe how the card or payment device communicates with the terminal. Signature and PIN describe cardholder verification. With a contact chip payment, you insert the card into a reader; with contactless, you tap a card or device near a contactless reader. The interaction method alone does not establish whether a signature or PIN will be requested.
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Sources
- EMVCo, “EMV Specifications: Enabling Safe and Convenient Payments”, on verification methods and differences across markets.
- American Express, “Frequently Asked Questions – Using your Contactless Chip Card”, on chip-and-signature and chip-and-PIN.
- Federal Reserve Bank of St. Louis, “The Smart-Chip Credit Card: A Current Solution”, by Jeannette Bennett, March 1, 2016.
- American Express Merchant, “Contactless Payment Solutions for Merchants”, on contact chip and contactless interactions.
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