Online/offline chip-and-PIN debit cards

By: Mr. X
This article appears on page 16 of the November 2017 issue.

After discovering that my ATM cards would not work at automatic teller machines in Amsterdam, Netherlands, in 2013, I got a chip-and-PIN debit card from Andrews Federal Credit Union, or AFCU (www.andrewsfcu.org). It had been mentioned in ITN (March ’14, pg. 40) that these would work in Europe.* I also got a preloaded chip-and-PIN debit card from AFCU in 2016.

I visited Milan in 2015, 2016 and 2017. Though I had no problems using my debit cards in ATMs, I tried both debit cards at Trenord ticket machines and at the city transport system ticket machines on each visit and they did not work. 

At the ticket counter in the Milano Centrale station, a Trenord employee (who was selling only Malpensa Express tickets) told me that most American cards are chip-and-PIN-or-signature and that they always default to chip-and-signature.**

Mr. X 

* The article referred to by Mr. X (who chose to remain anonymous) dealt with credit cards, not debit cards.

**With a chip-and-signature card, the cardholder must provide a signature, rather than just a PIN (personal identification number), in order to authorize a transaction. While it can be the case that some US-based credit cards default to chip-and-signature (and, hence, will not work at some chip-and-PIN card readers in Europe), a debit card will ALWAYS default to chip-and-PIN unless the cardholder specifically requests that it be used with a signature. Thus, it is very likely that what Mr. X experienced was, instead, an issue with online chip-and-PIN verification versus offline chip-and-PIN verification.

When making transactions or ATM withdrawals, chip-and-PIN credit cards and chip-and-PIN debit cards (which each make use of a data-storing chip embedded in the card instead of a magnetic strip) offer two kinds of authorization: online and offline. 

After the cardholder inserts his card into the point-of-sale terminal and inputs his PIN into the keypad, an online chip-and-PIN card must connect, over land lines, with the issuer of the card (i.e., the bank or credit union) for verification. Once verification is received from the card issuer, the transaction can be completed.

An offline chip-and-PIN card uses a PIN stored in the chip to authorize the purchase (once the PIN is punched in on the keypad), without any information from the electronic card reader having to be sent over land lines to the card issuer.

If a point-of-sale terminal does not have a phone or data line connection (which is possible at some unmanned kiosks, such as railway-ticket machines), then an online chip-and-PIN debit card cannot be verified by the bank, and the transaction will not be completed.

ITN wrote to Mr. X with this information and requested that he contact his card issuer, AFCU, to find out (from someone with specific knowledge of this issue) which type of debit card he had. He did so and reported the following:

I spoke to someone at AFCU. She didn’t know the difference between online and offline verification. I had to explain the difference, and even then she wasn’t sure, so I sent a secure communication to AFCU by logging into my account. 

I got a reply from the Lead Card Support Specialist at AFCU. He wrote, “Thank you for contacting Andrews Federal Credit Union in reference to the use of our Visa debit cards.

“In response to the [question about] our Visa debit cards being online or offline, I will advise you that all Andrews Federal’s Visa debit cards follow the US standard online processing of EMV debit cards. With that being said, our Visa debit cards are online.”

So they are online. That explains why my AFCU debit cards would not work when I tried to buy rail tickets. The Trenord ticket machines must have been unconnected, the offline type.