You know when it gets to the PIN screen, sometimes it’ll say, “Press cancel/enter to continue” and you can just… bypass the PIN. Doesn’t that just defeat the purpose of the PIN?
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There are 3 main methods of payment with a debit card.
1. Swipe
2. Chip
3. Tap
Each has their advantages and disadvantages when it comes to being a merchant. TL;DR is that the credit card company (Visa, Mastercard, AMEX, etc) is willing to accept more and more liability as you move from swipe, to chip, to tap.
A fraudulent transaction performed by a swipe payment via a cloned card, means the merchant is stuck with the lost inventory and is forced to refund the transaction. A chip payment method is significantly harder to clone compared to swipe and as such. The credit card company will accept more liability. A merchant may not have to refund a fraudulent transaction if it is performed via chip though they still may suffer a reputation hit with the CC company.
An finally with tap, it is the most “secure”. It is setup in a way where you basically cannot clone the card within the lifetime of the universe unless you are stupidly lucky. With this, the CC company accepts practicality all of the liability. The only way you can “tap” is with the physical card, and the card is only supposed to be with the cardholder and people the cardholder authorized by giving it to them.
Now with the PIN, you provide an additional level of verification on top of the various payment methods. When you provide your pin number, your verifying to the card that you are authorized to use it and that the card holder is personally running the transaction. The pin number isnt required because you are the only person who should ever know the pin. There are situations where you dont want people to have the PIN.
You dont want to hand your card to the waiter, give them the pin number, and have no idea what that card is doing during that 10-15 minute period. By running the card as credit, the liability gets shifted back to the merchant. If they ran an extra charge on your card to steal money, you want to be able to dispute it and show you did not personally authorize the transaction.
The reason your allowed to skip the PIN and run it as credit is most places, is that they are willing to accept the increase in liability in exchange for having to turn down fewer customers. As a merchant, you are more than allowed to set your own restrictions to shed off that liability. You can require the customer have matching ID with their credit card, use tap to pay, and run it as a PIN transaction if you would rather not deal with the headache.
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