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Chip-and-signature means an EMV payment card uses its embedded chip for a point-of-sale transaction and, when the transaction requests cardholder verification, the customer signs instead of entering a PIN. The chip and the signature do different jobs: the chip supports the payment transaction, while the signature is one way to verify the cardholder.
What “chip-and-signature” describes
The term combines two parts of a card payment. “Chip” refers to the embedded payment chip; “signature” refers to a cardholder verification method, or CVM. It does not mean that signing creates the chip’s security. The Federal Reserve Bank of St. Louis explains the chip’s transaction-processing role in The Smart-Chip Credit Card: A Current Solution.
American Express describes the distinction this way: chip-and-signature transactions are authorized with a signature, while chip-and-PIN transactions are authorized by entering a PIN. Both use the same EMV chip technology, according to its contactless chip card FAQ.
Chip-and-signature vs. chip-and-PIN
| Term | Cardholder verification when requested | Chip technology |
|---|---|---|
| Chip-and-signature | Sign | EMV chip |
| Chip-and-PIN | Enter a PIN | EMV chip |
The main difference is how the cardholder verifies the purchase—not a different kind of chip. Which verification method is available or requested can depend on the card, transaction setup and market.
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Does every chip payment require a signature or PIN?
No. A chip transaction does not necessarily prompt for either. EMVCo says EMV specifications support several CVMs, including online PIN, offline PIN, signature and no verification, and that requirements vary by market. Some transactions may therefore proceed without asking the customer to sign or enter a PIN. See EMVCo’s explanation of EMV specifications and CVMs.
So “chip-and-signature” describes a card and verification configuration; it is not a promise that every purchase will require a signature. A terminal’s prompt depends on the transaction and the applicable card and market rules.
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Is contactless the same as chip-and-signature?
No. Contact chip and contactless describe how the card or device communicates with the payment terminal. With a contact chip payment, the card is inserted into the reader; with contactless, a card or device is tapped near a contactless reader. These interaction methods are separate from whether verification uses a signature, a PIN or no verification. American Express outlines the different interactions in its merchant contactless payment overview.
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