So, this chip is always a secondary method of authenticating the card. I bought a computer once on my corporate card while in Germany, and instead of the reader flashing "Approved" it showed "Insert Card" because it had been flagged as a high-risk transaction due to the merchant code. I inserted the card, and put in my PIN, and it flashed "Approved."
You can swipe, or insert the card. Your choice unless the bank demands the chip's processing code.
Most small-business readers have the capability to read the smart card portion of the card, because they're marketed in both europe and the us. In europe, you don't GIVE your card to the waiter, they bring the reader to the table and swipe it in front of you. It took some adjusting to allowing someone to remove my bank card from my sight when I moved back here.
Europe is light years ahead of the US on this. My dad says that it's because the crooks in europe can't hold up a bank like they do in the US, and they have to actually think about how to steal money.