Target Becomes First Major U.S. Issuer to Use Chip & PIN Credit Cards

While millions of U.S. businesses have yet to update their checkout technology to accept chip-and-signature credit cards, retail giant Target is taking it a step further: It will start issuing chip-and-PIN cards to its REDcard holders.

The U.S. credit card and payment technology industries are in the midst of a security makeover as the country tries to upgrade its decades-old standard of using credit cards with magnetic stripes to a EMV chip-and-sign system. Cards embedded with EMV chips are said to be harder and more expensive to counterfeit, presumably making them more secure. Many consumers are now met with a new checkout experience, in which they have to dip their chip cards into the terminal (as opposed to the quick swipe they’re used to). Depending on the value of the transaction, the customer may have to verify his or her identity by providing a signature.

Many security experts say requiring a signature isn’t nearly as secure as requiring the cardholder to verify his or her identity with a personal identification number (PIN) — after all, illegible scribbling and forgery can pass as signatures, while PINs can’t be faked. With greater security in mind, Target is going beyond the new chip-and-signature requirements and issuing chip-and-PIN cards to its accountholders.

The type of Target card you have will determine how you use it at checkout — swipe, dip and sign or dip and PIN. For people using the Target Credit and Debit REDcards (which can only be used in Target stores), the company will issue chip-only cards — no magnetic stripes — according to information on the company website.

Target also has a co-branded credit card with Visa that can be used anywhere but has Target rewards. The first change these cardholders will notice is they’re no longer using a Visa card, because Target is issuing its chip-and-PIN cards with MasterCard. Cardholders’ account numbers will change, which means they need to update any stored payment information upon receiving their new cards. (Some cardholders can forget to update payment information for recurring charges and miss a payment, unintentionally dinging their credit scores. You can keep an eye on your credit scores for free on Credit.com to catch any unexpected late payments you may have missed.) The Target MasterCard will have a magnetic stripe, so it can continue to be used at other retailers, and the company FAQ on the changes says, “When using the card at a merchant who can accept chip cards, expect to be prompted to insert it.” Target told Credit.com Wednesday that it has set up its cards to prefer PIN, but the actual authentication method for the transaction will reflect what the merchant supports.

Target started issuing new cards in August, and consumers with Target credit or debit cards can expect their new cards to arrive between now and spring 2016.