A chip and PIN payment authenticates the card through its chip and the cardholder through their PIN, then sends an authorisation request to your acquirer. The whole exchange takes about two seconds. The reason to do it properly is not speed but liability: the verification method is part of the evidence if the transaction is later disputed.
What does chip and PIN mean, and what is a chip and PIN card?
Chip and PIN means two checks in one payment. The chip on the card proves the card is genuine, using EMV, the chip card standard named after the three schemes that created it, and the PIN proves the person holding it is the cardholder. A chip and PIN card is any debit, credit or prepaid card carrying that chip; the PIN is set by the bank that issued it, never by the business taking the payment. The same card will usually also tap for contactless, and the terminal asks for the PIN when the card or its issuer requires one.
How to use chip and PIN at the counter, step by step
Enter the amount, check it on the customer facing display, present the terminal, let the customer insert the card and enter their own PIN, and wait for the approval before handing anything over. Do not take the machine back to enter the PIN and do not retry a declined card more than once. Those two habits cause most avoidable disputes.
What a chip and PIN purchase records
The card, the amount, the time, the terminal and the verification method. That last field is what distinguishes a PIN verified sale from an unverified one, and it is what your acquirer will look at first in a chargeback. A sale where staff entered the PIN looks, in the record, exactly like a sale where the cardholder was not present.
The chip and PIN system behind the terminal
The terminal is only the front of the chip and PIN system. It reads the chip, takes the PIN on its own keypad, encrypts the details on the device and sends an authorisation request to your acquirer, which routes it through the card scheme to the customer's bank. The bank answers yes or no, usually in about two seconds, and the money moves separately and later. That is why pin and chip technology needs a certified terminal: a reader bought from one provider will not work on another provider's account.
When a chip payment fails
A declined chip payment is a decision by the customer's bank and is not something your terminal can override. Retry once at most. If the chip cannot be read, the terminal may offer a fallback, and a fallback transaction carries different liability, so use it only when the customer is present and known to you.
Questions people ask about chip and pin payment
How do I complete a chip and PIN transaction?
Enter the amount, show it to the customer, present the terminal, let them insert and enter their own PIN, and wait for the approval message before releasing goods.
What is a chip and PIN credit card?
A credit card with an EMV chip that the cardholder verifies with a PIN at the terminal. It is taken on the same hardware, in the same way, as a chip and PIN debit card. What differs is the cost to the business behind the scenes, because interchange is capped lower on UK consumer debit cards than on credit cards.
What is a chip and PIN transaction in a dispute?
A transaction where the record shows the cardholder verified themselves by PIN. That verification method affects how a chargeback is assessed, which is why staff must never enter a customer's PIN.
What should I do if a chip payment is declined?
Retry once at most, then ask for another payment method. The decline is the issuing bank's decision and your terminal cannot change it.