What are 'chip-and-signature' cards?

By UK CreditCards.com

Typing in your PIN to make a purchase is an action that's automatic and simple for most. But not for everyone -- especially those with mobility or memory impairment issues. That's where "chip-and-signature" cards come in. The problem is, the Payments Council has found, many consumers and retailers are perplexed by these cards.

What is a chip and signature card?
"Chip-and-PIN cards -- introduced in the UK in 2006 -- are now the norm. They're difficult to forge, and the requirement of entering a PIN helps prevent the use of stolen cards. Signing for purchases is a thing of the past for most shoppers. chip-and-signature

Yet, those who have dexterity problems, who are visually impaired or who have memory problems that prevent them from recalling PINs, may find this extra layer of security difficult. Chip-and-signature cards still have the difficult-to-replicate microprocessor chip -- but they require the cardholder to sign his or her name instead of entering a PIN. Although they are not quite as secure as a chip-and-PIN card (as a signature can be forged), users benefit from the same level of fraud protection offered on all bank cards.

While all UK banks offer chip-and-signature cards as an alternative to chip-and-PIN, and all retailers are obliged to accept these cards, .whether retailers know how they work is another question.

Poll reveals lack of chip-and-signature awareness
The Payment Council's study found that many consumers knew little or nothing about these cards. Nearly two-thirds of people who said they struggled with chip-and-PIN cards did not even know chip-and-signature cards existed.

The Payments Council also sent mystery shoppers with chip-and-signature cards to various retailers, and 26% of these shoppers said they felt embarrassed or anxious about using the card, typically because the retailer was not familiar with how the card worked. That could be a problem, considering that the UK's aging population could increase the number of people with memory and mobility problems.

Campaign has support from charities
The Payments Council is now working with banks, retail consortiums and charities to raise awareness about chip-and-signature cards -- a move that has been welcomed by organisations such as the Alzheimer's Society.

Andrew Chidgey, the Alzheimer's Society's director of external affairs, notes that today's consumers have many PINs, passwords and security questions to remember -- and that it might be too much for some.

"While it is important that appropriate security measures are put in place, these same measures can make the simple act of getting money out of an account or paying for shopping, very difficult for people with dementia," Chidgey said in a statement. "Alzheimer's Society agrees that it is important that people are made aware of alternative approaches that can help make banking and payments easier."

See related: Debit and credit card fraud hits 11-year low, How to protect yourself from charity fraud

Published: 23 July 2012