The main reason is that a PIN is more secure than a signature. While merchants are supposed to check the signature on each credit-card slip against that on the back of the card, it doesn't always happen and it's not too difficult to forge a signature well enough to fool an untrained eye. But with a chip card, if someone doesn't know your PIN then they can't use your card.
Also, chip cards get around the classic horror story in which someone takes your card into a back room or otherwise out of sight (think of a waiter or gas-station attendant who usually takes the card away and returns it) and imprints an
extra credit cards slip or two. All that person has to do is fill in that slip and copy your signature and you'll be charged for something you didn't buy.
With a chip card, if someone doesn't know your PIN then they can't use your credit card.
With a chip card, you have to enter your PIN for each transaction, and nobody but you knows that number.
Chip cards aren't perfect credit protectors, though — they don't address purchases you make by phone or on the internet. You won't be asked for your PIN when you use your card this way. Asking you to give your PIN verbally or type it into a website would compromise its security.
So the credit card companies are dealing with these transactions in other ways. Visa has a program called Verified by Visa, in which you set up a password for online purchases. MasterCard has a similar setup called SecureCode. Asking for the additional three- or four-digit security code printed on your card also provides some extra security, though not if someone has your card who shouldn't.
That's not to say chip cards won't eventually be used for remote purchases. Giles says MasterCard has developed a calculator-sized device that, when you insert your card in it, will generate a passcode for one-time use. You would use this like a SecureCode passcode. MasterCard will make this technology available to other card issuers, Giles says. He expects it to be widespread by 2015.
So in a few years, entering a PIN to use your credit card may be the norm even when you're shopping on the internet — and signing a credit card slip will seem as old-fashioned as, well, paying cash.
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