Several industry officials said that MasterCard has indicated support for chip-and-PIN security with credit cards, while Visa has supported the chip-and-signature approach in various public remarks. However, an official at Visa recently told Computerworld that Visa has no official preference, and some analysts consider MasterCard neutral on the matter. Some banks that issue both types of cards have been issuing MasterCard chip cards with a PIN requirement and Visa chip cards with a signature requirement.
The jury is still out on signature vs. PIN, and banks will be weighing preferences of consumers in coming months. In other words, it is entirely possible that come October 1, average customers might not know if their cards require a PIN or a signature unless they're informed by their banks. It's possible that some may not find out until they're in line to make a chip-based purchase for the first time.
What about when I shop online with a chip card?
The chip in the card offers no improvement in security when you're using your credit card number to shop online. It will be the same as if the card were a magnetic stripe card. If you happen to have a small portable chip card reader, then the enhanced security could come into play, assuming the seller on the other end could accept that kind of data. An artist selling paintings or a small merchant using chip-reading technology provided by Square or another vendor would still need to read an actual chip card in person, even though the transaction would almost seem to be online.
What's the significance of this October 1 deadline?
Banks and card companies set October 1 as the day when the liability for losses from card fraud will be transferred from banks to merchants, or the party with the least-secure technology.
The liability shift means that if a someone tries to buy a $500 espresso machine with a stolen card that doesn't have an embedded chip, and the merchant accepts the card, the merchant would take the loss, not the bank.
There's really no deadline for consumers, who will continue to be protected by banks against liability due to fraud. Consumers will still need to report lost or stolen cards, of course.
Major merchants that are making the conversion and are worried about their newfound liability will likely require shoppers to use chip cards after October 1. It isn't clear how much backlash will come from customers who aren't prepared. People who have only magnetic strip cards will probably be permitted to complete their transactions with a normal swipe. In such situations, the liability would fall back onto the bank that issued the noncompliant card, according to Jordan McKee, an analyst at 451 Research.