For the longest time, chip-and-pin readers in most european countries would let you just swipe the magnetic card if you didn't have a chip.. this allowed americans (and whoever else still uses this technology) to be able to shop when they travel.
Unfortunately a disproportionate amount of theft occurs by bypassing the chip-and-pin system. Many european countries and banks finally had enough and said "no more loopholes, chip-and-pin only" and set a date.
Lo and behold this spurred the US banks to finally start releasing chip-and-pin enabled cards, otherwise their clients would find themselves unable to buy things overseas.
The deadlines have come and went in my country, and today it is literally impossible to buy anything with just a magnetic stripe.
I imagine the US will solve the problem the same way.. by no longer allowing magnetic stripes to be used.
More annoyingly, whether I swiped or dipped, a signature was required. Except, again, where there was no way to sign (parking garages). Then, magically, my PIN was "good enough".
I went out of my way to get EMV cards last year due to upcoming trips, because I had only been overseas sporadically over the past decade and assumed that the magstripe was gone. It was not. If anything, merchants seemed more able to deal with them than 10 years ago, where I occasionally had a clerk who couldn't figure out whether to swipe extremely slowly, or quickly enough to set fire to the equipment.
As a UK resident with a UK card it's been a long time since I swiped or signed. I think you must have the "require signature always" bit set on your cards because someone in the issuing chain doesn't trust EMV.
I don't think I have a single card that supports pin.
Here is the campaign that was ran by the largest payment processor letting everyone know the old system was going away. It was heavily advertised all over the country.
http://www.valitor.is/fyrirtaekjalausnir/pinnid-a-minnid/
Perhaps there is somehow an exception for foreign cards? But this is news to me, and seems like it defeats the entire purpose.
A European-issued card would deny use of the magstripe on an EMV reader. This could possibly by overridden by the cashier, but most won't have the authority to do this. (The merchant takes responsibility for fraud in this case.)
Sure it could check for the actual chip, but credit card fraudsters aren't creating fake cards that include the chip so that wouldn't help either.
I would argue the way they should implement it is such that the bank itself rejects the transaction if it knows the card is chip enabled and the terminal is as well.
If the terminal doesn't support it the processor always lets it through. If the terminal does support it the processor only lets it through if using chip and pin. Then again, maybe there won't be non chip and pin terminal much longer so that won't matter.
Should that read 'credit card fraudsters are creating fake cards that include the chip' ?
(for example, the EMV standard explicitly handles various failure modes like "PIN-pad is broken", "card holder does not remember PIN" and so on, and allows configurations that accept such transactions)
That's how it works for all countries other than the US. In the US EMV capable terminals are not common so transactions in the US are typically permitted no matter if magstripe or EMV. This is why starting with October this year the US are finally making the switch to EMV and once that roll-out is complete, magstripe transactions could (theoretically) be either disabled or severely limited. For instance you might have to confirm a magstripe transaction with a text message.
Fortunately, it is easy to detect! The terminal will send the magstripe data online when authorizing the transaction, and the backend systems will identify the corruption in magstripe data and identify it as fraud.