Yes, you'll choose a PIN for transaction security, but only certain merchants in Europe will ever ask you for it. Here's why.

Here in America, where we take landline telephones and Internet for granted, it's easy to forget that folks in other parts of the world didn't have the luxury of checking credit card security in real time until very recently. The "chip-and-PIN" system emerged in the mid-1990s to help retailers without access to dedicated phone lines accept payments securely.

The technology embeds account information, including a "floor limit" for acceptable transaction risk, directly into an exposed chip on the credit card's surface. Once you've inserted your card into a Euro-style point-of-sale terminal, it asks for your personal identification number. That PIN isn't stored on the card itself, though. The terminal uses an algorithm to turn your PIN and account information into a "token" that your merchant can upload for payment at the end of their business day.

European merchants choose whether you should reveal your PIN

Visa, MasterCard, and other payment platforms allow merchants to set their own risk tolerance by charging different rates for various transaction styles. A "card not present" transaction over the phone costs the most. A "chip-and-PIN" transaction, requiring a physical card with an extra security factor, costs the least. With credit card skimming and cloning running rampant in some parts of Europe, many merchants there have chosen to only accept credit cards with PINs.

That means you'll set a PIN on your new JPMorgan Select Card before you leave the United States, but you'll only need to punch it into a keypad when asked by merchants. In practice, this will probably only happen if you venture far from heavy business and tourist areas.

Merchants with real-time connections to payment servers prefer the security of validating contactless EMV chips online. And, according to officials at Visa, the "chip-and-PIN" phenomenon will subside as more European merchants convert their credit card systems to the same contactless readers we're already seeing here in the United States.

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