>> FotheringtonTomas, thanks for the explanation.
>>
I don't think the time comes into it - loosely speaking (and I may be completely wrong here), the chip on your card is capable of performing an encryption operation using your PIN as part of the private key. This will generate a unique 8 digit output which relies on both the input number from the bank and your PIN.
Your bank knows what your PIN is, so it performs the same operation on its end. If the number you generate on the machine matches, the bank knows that the person with the card knows the PIN, and by de facto, is the account holder.
The machine is nothing more than an interface to the chip, which interestingly, is now being built directly into the card by VISA.
www.visaeurope.com/en/about_us/innovation/visa_codesure.aspx
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