Definition
A Personal Identification Number (PIN) is a unique, typically four to six-digit code assigned to an individual cardholder to authenticate and authorize access to financial services involving certain types of cards:
- Cash cards
- Credit cards
- Multifunctional cards
The PIN must be kept confidential by the cardholder to prevent unauthorized access, and it is used in automated teller machines (ATMs) and electronic funds transfer at the point of sale (EFTPOS).
Examples
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ATM Withdrawals: When a cardholder uses their debit card at an ATM, they must enter their PIN to access their account and withdraw cash.
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Point of Sale Transactions: During a retail purchase, the cardholder may be prompted to enter their PIN to complete the electronic funds transfer, ensuring the transaction is authorized by the proper individual.
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Online Banking: For additional security, some online banking systems require a PIN when accessing sensitive information or performing high-value transactions.
Frequently Asked Questions (FAQs)
Q1: How is my PIN chosen? A1: Your PIN is often assigned by the financial institution that issued the card, but many institutions allow you to change it to a number of your choice for easier memorization.
Q2: How can I keep my PIN secure? A2: Never share your PIN with anyone, don’t write it down where it can be easily found, and avoid using easily guessed numbers like birthdates.
Q3: What should I do if I forget my PIN? A3: Contact your bank or card issuer immediately. They will guide you through the process of resetting your PIN, which may include confirming your identity.
Q4: Is it secure to use the same PIN for multiple cards? A4: It’s not advisable to use the same PIN for multiple cards as it increases the risk of multiple accounts being compromised if your PIN is discovered.
Q5: What is a phantom withdrawal and how is it related to PINs? A5: Phantom withdrawals occur when unauthorized withdrawals appear on an account statement despite the cardholder having secured their PIN. Investigations into these matters are crucial to identifying fraud.
Related Terms
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Automated Teller Machine (ATM): A machine that allows cardholders to perform financial transactions such as withdrawals, deposits, and balance inquiries using their card and PIN.
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Electronic Funds Transfer at Point of Sale (EFTPOS): A system allowing payment for goods and services using cards. The transaction is authenticated by the cardholder entering their PIN.
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Credit Card: A card issued by a financial institution that allows the holder to borrow funds up to a certain limit, typically requiring a PIN for cash advances.
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Multifunctional Card: A card that combines multiple functionalities, such as payment, identification, and security access, often leveraging a PIN for authentication.
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Phantom Withdrawals: Unauthorized withdrawals from a bank account where the card and PIN security appear uncompromised at first glance.
Online Resources
Suggested Books for Further Studies
- “Payments Systems in the U.S.” by Carol Coye Benson and Scott Loftesness: Provides a comprehensive look into the mechanisms and technologies behind payment systems, including the use of PINs.
- “Security and Privacy in Biometrics Authentication” by Patrik Bours: Offers insights into the evolving landscape of authentication mechanisms including the role of PINs.
- “Practical Cryptography” by Niels Ferguson and Bruce Schneier: While broader in scope, this book covers cryptographic systems and security, relevant for understanding the intricacies of PIN protection.
