Chip and PIN is something we have all heard of, but I wonder how many of us really know what it is, how it works and why it is meant to be better than the old method of signing for your purchases.  For your convenience, I shall outline the subject now:
Chip and PIN is the implementation of the EMV (Europay, Mastercard and Visa) standard for secure payments, designed to make transactions more secure and reduce credit card fraud.  It involves embedding tiny microchips into credit and debits cards, which are automatically authentically using a PIN security number.  By inserting the card into a credit card terminal, a customer has to insert the correct PIN number to authenticate the payment.  If a customer does not know their PIN number, the verification fails and the transaction does not go ahead; making the system secure, yet also very swift and simple.
Until it was introduced, all credit and debit card transactions required a signature for verification after the account data was read off the magnetic strip or an imprint was made of the raised text of the card.  The problem with this system was that people could easily steal cards from people and forge a signature, or steal cards from the post, write their own signature on the card and go about using it as if it was their own.  More advanced methods of card fraud involved technology that was used to clone cards by reading the magnetic data from one magnetic slip and writing it to another.  With the new system, another person may have your card but, without also knowing the correct PIN number, they cannot use it for face-to-face sales.  At the same time, these PIN numbers are entered in very public spaces, where somebody could easily observe and remember them.  All it would then take would be for the same person to steal the relevant card and cashiers have no reason to suspect them for using it.  Even so, it would seem harder for another person to get hold of both your card and secret PIN number than to steal your card and forge your signature.
Despite the growing popularity of the Chip and PIN system – over 1.1 million machines in the UK are Chip and PIN compatible – many small businesses are reluctant to upgrade, due to the cost of purchasing a new credit card terminal, or point of sale system.  Nevertheless, all major banks now issue cards featuring both magnetic strips and chips.  Cashiers can still instigation PIN Bypasses, allowing customers to sign for their purchases if they forget their PIN number, however this is strongly discouraged and card issuers and banks can choose to decline transactions that are made in this way.

As I have already explained in my previous post, there are myriad advantages to purchasing things on credit cards, in the form of multiple protection schemes, insurance and the ability to withhold payments until you are happy with the service you have been given.  But these are not the only advantages of using credit cards for each and every purchase, as I will now explain.

Convenience

It is no secret that credit cards are a convenient method of payment, but it is not just their usability that is an advantage.  In the modern world it is not uncommon for hotels and car rental services to ask for credit card numbers for reservations and rentals and, although debit card numbers do suffice, it is especially convenient to be able to book and pay all on one card.  What’s more, there is a peace of mind that comes with keeping companies away from checking accounts – again due to the protection offered by credit cards.

What’s more, unless you keep very detailed records of everything you purchase with cash, credit cards offer a far superior summary of your financial activity over the year, as well as over individual months and weeks.  Credit card summaries make it far easier to keep tabs on what you are spending, as well as when and where you are spending it!  Paying your bills by credit card will also combine all your outgoings into one monthly payment – your credit card payment – which is provided with a break-down of what you have spent on what.  As daunting as it may seem to have every payment coming out at once, it is a sure-fire way to ensure you don’t let the other bills mount up!

One of the most convenient aspects of paying by credit card is that they are accepted almost everywhere – Visa especially.  Anywhere you can pay on card, you can pay on Visa or Mastercard – unlike those poor fools who are tied down with a useless Solo card that can’t even be used to buy train tickets (I am one of these fools).  Putting all your purchases onto a credit card will also greatly bolster your credit rating; although most payments are very small, the overall charge to your credit card will mount up and, providing you pay it off, you will accumulate thousands of pounds of paid expenses on your credit card – the key to a badass credit rating!

So that concludes my brief insight as to why we should all use credit cards.  I believe it goes without saying that credit cards are only a good idea if you are capable of sticking to a budget; if you overspend and don’t pay off what you accumulate, credit cards will ruin you and your life.  But if you can keep tabs on what you are spending and are capable of holding back when you can’t afford to spend, credit cards are a great way of protecting yourself, you finances and your purchases, whilst paying in the quickest and most convenient manner available.

Credit cards have taken a lot of indirect flak in recently months, mainly due to the turmoil in the world of finance that is blamed largely on irresponsible spending and lending, helped – in part – by our use of credit cards.

However, it should not be forgotten that it was not the use of credit cards that got us into trouble, but the irresponsible use; like so many things in the world, credit cards are great when used sensibly and with some foresight. In this post I will outline some advantages to using credit cards within merchant services, with regards to the protection they offer the comsumer.

When you make a purchase on a credit card you are essentially letting the credit card provider pay for the purchase and agreeing to pay them back within a a grace period. This method of delaying payment acts as a protective buffer against fraud, dodgy dealings and good old fashioned incompetence. Because it is the credit card provider that has made the payment, you have invested nothing until you make the repayment - giving you time to ensure that the product arrives if it is being sent, that you have not been charged twice or been otherwise messed around. If it turns out that something has gone wrong, you are actually under no obligation to pay the credit card fee until the issue has been resolved. In fact, you have the right to refuse to pay and leave it up to the credit card provider to claim their money back and, let’s be honest, merchants are more likely to bend over backwards for Visa than they are to appease you!

To give you a personal example; my band and I spent two months in California this summer and purchased our plane tickets online with debit card. Just before we were due to return home we got the news that Fly Zoom had gone bankrupt and taken our tickets with it! Had we paid on credit card, we would have been entitled to a refund; as it was we were forced to accept the loss of hundreds of pounds-worth of tickets and buy new tickets home from Virgin! In cases like this, there is no substitute for the protection offered by credit cards!

It’s not just when the merchant goes wrong that you are protected with a credit card either; in the cases of loss, for example, purchases made on a credit card can be replaced, repaired or even fully refunded, usually within 90 days of purchase. Naturally this does not cover the simple misplacing of an item, but loss through fire, floods, theft and so on – the specifics are variable. Nevertheless, free insurance for a few months is definitely not to be sniffed at! What’s more, you can actually register your purchases with the warranty management service and get an extra year of warranty protection on your purchases as well!

The key to getting the most out of the protection offered by your credit card provider is knowing the services on offer as well as your own rights. The delayed payment offers a means by which you can argue your case without having your money taken from you.

In the next post I shall cover other advatanges of using credit cards - namely the massive convenience!