Card PIN Requested at Stores in Mexico

Stores, restaurants and bars across Mexico are beginning to employ a new “PIN signature” system (referred to in Mexico as firma electronica, or electronic signature), to take payments from debit and credit cards which have the new-style chip installed.

As recently as the early and mid 1990’s, most of Mexico’s stores were still using the carbon paper vouchers to take payment with plastic cards. Before the advent of electronic sales terminals, the sales assistant would have to refer to a book, supplied by the bank, containing the numbers of lost,stolen and cancelled cards. If the number on the card did not appear in the book, the voucher was handed over for signature and payment.  For international cards, the store supervisor or manager had to telephone the bank for pre-authorization.

By the late 1990’s new cash registers with ePOS systems (wiki) were introduced in earnest at Mexico’s stores and restaurants, and even smaller establishments were issued with electronic terminals to facilitate payment by credit and debit cards.   The book was no longer required and international cards were automatically checked and pre-authorized online.

As technology facilitated the rise of the ‘electronic payment’ process, the issue and use of credit and debits cards ballooned.  Today, in countries like the USA, the UK, Germany and Australia, electronic payments account for over half of all transactions: cash is being used less and less each year.  In Mexico, the opposite is true: its large informal economy and the relatively low penetration of bank account-holders, continues to keep cash at the forefront of economic activity here.

The increase in card issuance and card usage has been accompanied by an increase in the fraudulent use of credit cards.  For example, criminals realized that the data on the back of the magnetic strip were unencrypted and easily read-able.  So ‘cloning’ a credit card is straightforward provided one could take a ‘read’ of the data on someone’s card (or have access to the details visible on the card such as number, name, expiry date, etc).  Banks subsequently introduced a 3-digit ’security’ code on the back of the card, similar the 4-digit code AMEX has been using for years, to increase card security.  This mitigated some of the fraud, but the wider problem didn’t go away.

The latest generation of bank payment cards include an electronic chip; visible and embedded into the front of the card.  Unlike the data on the magnetic strip, the data on the chip are encrypted, making it difficult for criminals to read and, thus, clone the card.

The procedure for payment has also changed for cards with the new chip technology.  Whereas before a criminal could clone a card or steal a card and forge the signature on the back, the new system requires the card holder to enter a 4-digit PIN into an electronic terminal at the sales counter; in the same way that a PIN is required to withdraw cash from an ATM.

The new chip-enabled terminals will still accept payment using the magnetic strip with a hand-written signature for cards which don’t have chips embedded into them.  However, if your card has a chip embedded, the terminal will usually only allow the transaction to be processed using the chip and PIN signature method.

If you are using your credit/debit cards in Mexico, be aware that you may now be asked for an “electronic signature” (meaning your PIN) instead of your hand signature when you make a purchase at a store or when you settle your bill at a restaurant.   Not all establishments are using the new chip system and, in those instances, your card will still have its magnetic strip swiped and your hand-signature requested on the sales voucher.

Not all banks are issuing cards with chips embedded yet, so if your card does not have a chip, you may continue to use your card by signing sales vouchers.  If you are unsure, contact the financial institution that issued your card for advice.

Also See:

• Mexperience Guide to Money in Mexico
• Banks, Banking and Credit in Mexico
• EMV Security System (Wiki)