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General
What is Chip and PIN?
Why change from signature to PIN?
How does Chip and PIN prevent fraud?
How does Chip and PIN affect customer not present transactions?
PIN Bypass/Feb 14th 2006 PIN Day Questions
What is PIN Day?
Why is PIN Day Necessary?
Are there any restrictions on accepting cards without a PIN?
Will Cardholders still be able to sign for transactions?
Can I still use PIN Bypass after PIN Day?
Will I be liable if I allow a PIN Bypass transaction?
Can I process a transaction if the PIN is locked?
Do I need to switch off my terminal’s PIN Bypass function?
American Express Chip and PIN Cards Issuance
When are American Express cards going to be Chip and PIN?
Why do all other cards have Chip and PIN, but American Express doesn’t?
Financial
Will Chip and PIN have any impact on my discount rate?
Will there be any change to the way in which I am paid by American Express?
Is there any cost involved in upgrading my terminal?
At the Point of Sale
What do I do if the Cardmember claims not to know or to have forgotten their PIN?
What should I do if the card has no chip on it?
My terminal is set up for Chip and PIN, do I have to accept any signature cards?
Does Chip and PIN make processing transactions slower?
What training will I need to provide to my customer facing staff?
Terminals
How do I get my existing terminal Chip and PIN certified?
Is there any cost involved in upgrading my terminal?
Can I get an American Express Chip and PIN terminal?
Fraud Liability Shift
What is the liability shift?
Who is liable if the card does not have a chip?
If the card has no chip or PIN, will I be liable for any fraud?
Who is liable when the chip on the card has failed?
Who is liable when the customer forgets their PIN?
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General
What is Chip and PIN?
Chip and PIN is an initiative across the payment card industry to reduce fraud and make transactions more secure. The chip on the card stores data securely so that it cannot be copied or altered and ensures that the card is not a counterfeit.
PIN stands for Personal Identification Number. Rather than sign to authorise the transaction, the cardholder simply enters a 4 digit PIN, just like you do at an ATM machine. This number is stored on the microchip on the card, making it more difficult to forge - or to use - a stolen card.
American Express now issues Chip and PIN enabled cards. Signature cards continue to be in circulation however, for both American Express and other card issuers; for example, for international cardholders travelling to and spending in the UK. For the foreseeable future, you should expect to see a mix of different card types, and should accept all of them equally.
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Why change from signature to PIN?
In recent years, payment card fraud has increased significantly due to the number of cards in circulation and the growth in card usage. To counteract fraud, it is necessary to establish that each card is genuine and that the person using it is the true owner. Chip and PIN reduces card fraud by making it harder for a card to be altered or copied, and by ensuring that only the owner of the card is able to use it.
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How does Chip and PIN prevent fraud?
The four digit PIN is known only to the Cardmember, so lost, stolen or cloned cards are useless to criminals, who don’t know the PIN.
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How does Chip and PIN affect customer not present transactions?
Any transaction where the customer is not present, such as telephone, internet or mail order is not affected by the introduction of Chip and PIN. Though, of course, all types of cards can be used to make these transactions. There is no change to the Fraud Liability for these types of transactions, provided that the correct authorisation procedure is followed.
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PIN Bypass/Feb 14th 2006 PIN Day Questions
What is PIN Day?
PIN Day is the final day on which PIN Bypass will be routinely accepted by many card issuers. After this date, you should not necessarily expect all your requests for PIN Bypass to be allowed. If a customer claims to have forgotten their PIN, you can still attempt PIN Bypass for them, and the terminal will advise you if the card’s issuer has allowed it or not.
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Why is PIN Day Necessary?
PIN Bypass was introduced to allow Cardmembers and retailers to become accustomed to the new technology. Now that most people are comfortable with using PIN, the card industry has chosen PIN Day as the day from which consumers should no longer expect PIN Bypass transactions to be automatically accepted. Elimination of Bypass will help protect against fraudulent usage of payment cards.
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Are there any restrictions on accepting cards that do not have a PIN?
No, not at all - for the foreseeable future there will be a variety of different card types in circulation. If a card has a chip, you should place it into the reader and follow the terminal’s instructions. If the card has no chip, simply swipe the magnetic stripe.
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Will Cardholders still be able to sign for transactions?
Transactions on cards with magnetic stripes only, or on chip cards without a PIN will be completed by signature. Cardmembers who have Chip and PIN enabled cards may request PIN Bypass, but they should not automatically expect the Card Issuer to approve it after PIN Day.
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Can I still use PIN Bypass after PIN Day?
You can continue to use Bypass after PIN Day, but you should not expect the transaction to be automatically accepted by the Card Issuer. If the Card Issuer allows the transaction, the Cardmember can still sign for it. If the PIN Bypass is declined, the Issuer has at least been alerted that the Cardmember is having difficulty with PIN, which enables the Issuer to contact them.
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Will I be liable if I allow a PIN Bypass transaction?
If the Card Issuer allows the PIN Bypass transaction, you will not be liable if it turns out to be fraudulent. However, if you select PIN Bypass and the Issuer declines the transaction, and you go on to let the customer sign for it, you would be liable in case of fraud.
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Can I process a transaction if the PIN is locked?
Each Issuer will decide how to process these transactions. If the Issuer approves the transaction, they will accept the liability as long as you have followed the Card Acceptance Procedures and processed the transaction correctly. Issuers may change their policy on accepting these transactions at anytime and it is unlikely that these transactions will be approved after PIN Day. Once again, you should be guided by the message displayed by your terminal: if the transaction is declined, you should not accept a signature as authorisation.
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Do I need to switch off my terminal’s PIN Bypass function?
No, you do not need to make any modifications to your terminal.
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American Express Chip and PIN Cards
When are American Express cards going to be Chip and PIN?
Some American Express cards are Chip and PIN enabled, but you should expect to see signature cards alongside Chip and PIN cards for the foreseeable future. Visiting international and UK Cardmembers will continue to present cards without chips, as will some disabled customers. You must still accept non-Chip and PIN cards. If you are presented with a card without a chip, just swipe it, as you would today. The terminal will prompt for a signature. There are some cards in circulation with chips but no PINs – once again, the terminal will prompt for a signature for these cards.
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Why do all other cards have Chip and PIN, but American Express doesn’t?
Some American Express cards are Chip and PIN enabled, but you should expect to see signature cards alongside Chip and PIN cards for the foreseeable future. Visiting international and UK Cardmembers will continue to present cards without chips, as will some disabled customers. You must still accept non-Chip and PIN cards. If you are presented with a card without a chip, just swipe it, as you would today. The terminal will prompt for a signature. There are some cards in circulation with chips but no PINs – once again, the terminal will prompt for a signature for these cards.
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Financial
Will Chip and PIN have any impact on my discount rate?
No, there is no impact on your discount rate as a result of Chip and PIN.
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Will there be any change to the way in which I am paid by American Express?
No, Chip and PIN does not affect the way in which American Express will pay you. This will continue as per your Terms and Conditions.
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Is there any cost involved in upgrading my terminal?
If your Point of Sale terminal is provided by another bank, they will upgrade it. Please contact your terminal provider if you require more information. If you have an American Express supplied terminal, it will be upgraded free of charge.
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At the Point of Sale
What do I do if the Cardmember claims not to know or to have forgotten their PIN?
When the card is inserted into the chip reader of a Chip and PIN terminal, the terminal will prompt for the Cardmember to enter a PIN if one is stored on it. If the Cardmember claims not to know it, you can attempt to override this using your terminal’s PIN Bypass or signature acceptance function.
If the terminal shows that the Card Issuer allows PIN Bypass, the Cardmember may sign for it. In these cases, the Card Issuer will still cover the liability if the transaction turns out to be fraudulent, provided that you have followed the correct authorisation and signature checking procedures.
If the terminal tells you that PIN Bypass has not been accepted and that the transaction has been declined, you must not allow the Cardmember to sign for it. If you do, you will be liable if the transaction turns out to be fraudulent.
In general, if you follow the instructions given to you by the terminal, and the correct Card Acceptance Procedures, you will always be protected from liability for fraudulent transactions.
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What should I do if the card has no chip on it?
Just swipe the card’s magnetic stripe. The terminal will prompt for a signature and the Cardmember should sign for the transaction.
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My terminal is set up for Chip and PIN, do I have to accept any signature cards?
Yes, all cards must be accepted equally, regardless of whether they are Chip and PIN cards or not. If you are presented with a card without a chip, just swipe the card’s magnetic stripe. The terminal will prompt for a signature. There are also some American Express cards in circulation with chips but no PINs, and for these cards the terminal will prompt for a signature when you insert the chip in the reader.
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Does Chip and PIN make processing transactions slower?
No. Research has shown that PIN verified transactions are at least on par with those where a signature is required.
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What training will I need to provide to my customer facing staff?
Each merchant should determine their own training requirements, in conjunction with their acquiring bank. It is very important that your staff are aware that a variety of cards – Chip and PIN, Chip and Signature, and Magnetic Stripe and Signature – will be in circulation for the foreseeable future, and that they are familiar with the correct procedure for processing transactions on all types of card. Staff training information is available at www.chipandpin.co.uk
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Terminals
How do I get my existing terminal Chip and PIN certified?
If your terminal is owned by American Express, we will have contacted you to ensure that the terminal is upgraded to be Chip and PIN compliant. If you have not responded to our communications, it is important that you contact our Point of Sale Helpdesk as soon as possible on 01273 609966 between 8am and 6pm, Monday to Friday.
If your terminal is provided to you by another bank, you should contact them about obtaining a new or upgraded terminal.
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Is there any cost involved in upgrading my terminal?
If your Point of Sale terminal is provided by another bank, they will upgrade it. Please contact your terminal provider if you require more information. If you have an American Express supplied terminal, it will be upgraded free of charge.
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Can I get an American Express Chip and PIN terminal?
Our Point of Sale Helpdesk can assist you to get an American Express Chip and PIN terminal. You can call the Helpdesk on 01273 609966 between 8am and 6pm, Monday to Friday.
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Fraud Liability Shift
What is the liability shift?
Chip and PIN is designed to reduce fraud, and we are working with the payment card industry and you to help the UK achieve lower fraud rates. From July 1, 2005, any merchant who has not upgraded their terminal to be Chip and PIN compliant will be liable for any fraudulent transactions on American Express branded Chip and PIN enabled cards which could have been avoided by upgrading the terminal. This doesn’t affect transactions where the terminal prompts you for the customer’s signature – the liability remains with the card issuer for these types of transaction, as long as you follow the correct authorisation and signature checking procedures.
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Who is liable if the Card does not have a chip?
If the card does not have a chip the card issuer will remain liable for any fraud, as long as you have followed the correct authorisation and signature checking procedure.
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If the card has no chip or PIN, will I be liable for any fraud?
No - if the card does not have a chip, or if it is a chip and signature card, the card issuer will remain liable for any fraud, as long as you follow the correct authorisation and signature checking procedures.
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Who is liable when the chip on the Card has failed?
If the chip is not functioning, you should swipe the card. The card issuer will remain liable for any fraud, as long as you have followed the correct authorisation and signature checking procedure.
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Who is liable when the customer forgets their PIN?
When the card is inserted into the chip reader, the terminal will prompt for the Cardmember to enter a PIN if one is stored on the card. If the Cardmember claims not to know it, you can attempt to override this using your terminal’s PIN Bypass or signature acceptance function.
If the terminal shows that the Card Issuer allows PIN Bypass, the Cardmember may sign for it. In these cases, the Card Issuer will still cover the liability if the transaction turns out to be fraudulent, provided that you have followed the correct authorisation and signature checking procedures.
If the terminal tells you that PIN Bypass has not been accepted and that the transaction has been declined, you must not allow the Cardmember to sign for it. If you do, you will be liable if the transaction turns out to be fraudulent.
In general, if you follow the instructions given to you by the terminal, and the correct Card Acceptance Procedures, you will always be protected from liability for fraudulent transactions.
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