Credit cards have a magnetic stripe, which is swiped when a charge is made. The buyer is then supposed to sign the receipt, and the merchant is to check the signature against the back of the card. In real life, we know that doesn’t happen. Thieves get the magnetic stripe information from a purchase, and then record that information on another card — effectively making a “duplicate” or “clone” of your card to be used to fraudulently make purchases.
With CHIP-AND-SIGNATURE, you insert the card into the bottom of the merchant’s card reader (not “Swipe” it like today’s traditional cards). You then verify your identity with your signature. This method is not as secure as chip-and-pin. Have you ever seen the way your signature looks on most credit card terminals that you have signed? It would not match your regular signature, so how secure is it?
With CHIP-AND-PIN, you insert the card into the bottom of the merchant’s card reader as before, but you are required to enter a four-digit Personal Identification Number (PIN) which must match the PIN data store on the card in the chip. This makes it substantially more difficult for thieves to duplicate and make fraudulent purchases.