Why is bypassing the PIN on a debit card something you can do? Doesn’t that defeat the purpose of having a PIN to begin with?
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The credit card companies make money when you use your card, so they want it to be easy for you to use. The credit card companies lose money when cards are stolen and they have to reimburse you for charges you didn’t make. These are the two main forces at play: balancing convenience (so you use the card a lot) vs. insecurity (so it’s easy to steal) in the way that can earn the most money for the card issuer.
The companies like you to do transactions in a more secure mode, like chip or chip+PIN. These are harder to replicate and steal, so the transactions on them are less likely to be fraud, which is good for them. However, sometimes the chip stops working or the reader machine stops working. So there are fallback solutions like swiping, or just manually entering the digits off the card into a machine. Swiping can be “skimmed” and replicated into a different card, and manual entry can be replicated just with a picture of the card. These are less secure. Companies usually still allow them as a fallback when the other methods aren’t working, because they would still rather you use the card. But they don’t want that to be the default.
A part that might not be visible to you as the consumer is the fraud detection system. At any point, they can deny a transaction if their system thinks something fishy is happening and that it might not actually be you. If you 99% use chip+PIN and all of a sudden you start doing a ton of swipe transactions in a different state, that’s a strong signal to the fraud detection system that there’s a fake version of your card out there and they can start denying those while they try to contact you about the fraud. Whereas if you are trying to use a swipe transaction at a grocery store that you have visited every week for the past 3 years, chances are good that it’s still you and there was just a technical glitch.
The credit card machine will transmit this info to the company as part of the transaction. (Look closely at your receipts. They will often say “Method: chip” or something similar.) So that’s part of the information that they can use to make fraud decisions. As noted by other commenters, the companies also sometimes put limits on how big of a transaction you can do with various modes. These are all mechanisms to help them detect fraud quickly without being a huge deterrent to using your card. The faster they can catch fraud when your card is stolen, the less money they lose to fraud.
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