A supermarket has a cashback option with a limit of €200. The cashier entered a cashback transaction for €100. I tapped the terminal using a non-SEPA card. Instant decline. We tried again, this time using the EMV chip. The cashier said enter your PIN. The terminal displayed the amount and said “press OK” (did not ask for PIN). Pressing digits had no effect. It was apparently only asking for confirmation not authentication. I pressed OK and got an instant decline with no reason given. Tried again, this time entering my whole pin even though the buttons had no effect, then pressed OK. Again declined.
It is bizarre that PIN was not requested. I think the cashier rightfully expected PIN entry because it was a 3-figure amount.
I went to an entirely different shop and asked for much less cashback. Same thing. Terminal just asked me to press OK then gave an instant decline. Then at that same shop I made a normal purchase without cashback, and it succeeded.
I asked the bank why I was declined. The bank said there are no problems with the account and that their records show that every transaction was approved. The bank insisted that there is no trace of any failed transaction.
So, WTF is happening? Is the PoS terminal deciding to refuse the transaction without even contacting the bank? And if so, why would it make the offer in the 1st place (to press OK)?
My wild theory
I believe EMV chips are designed to confirm a PIN without using the network which enables transactions to happen offline (to later settle with the bank when online). My bank told me over the phone that my PIN is active and confirmed it. This implies the bank expects to confirm PIN over the network.
So is it possible that the European machine expects to verify the PIN for the EMV chip, and my bank only verifies PINs over the network?