Credit card holders are taking notice of a mysterious new chip embedded in their plastic money. The futuristic-looking EMV chip helps protect cardholders from a variety of threats, including card cloning and identity theft. But though it represents the future of credit cards, many are still wondering: What exactly does the EMV chip do? Luckily, learning the ins and outs of your new EMV chip is simple.
Europay, MasterCard, Visa
Image via Flickr by frankieleon
The chip is named after the three major credit card manufactures behind its technology, which was developed to stem the tide of credit card fraud after studies showed that 37 percent of fraudulent charges can be traced to card counterfeiting. In counterfeit fraud, information on a card’s magnetic strip is copied, then reproduced on a new card. To combat this trend, the EMV chip was developed. The technology isn’t new — it has been around since the 1980s — but its golden moment has finally arrived.
Eliminating Fraud One Purchase at a Time
Whenever a purchase is made using a credit card equipped with an EMV chip, a one-time key is created to identify the transaction. The next time a purchase is made, the card automatically attributes a new key to the transaction. What does this mean for consumers? The magnetic strip, essentially the Achilles’ heel of the credit card, can no longer be compromised, because the same signature isn’t being paired with each transaction. Thus, even if the strip information is stolen, the victim doesn’t risk losing money to fraudulent charges.
A Win for Everyone but Scammers
There’s another reason why credit cards across the country are being outfitted with EMV chips. MasterCard and Visa have placed liability on banks and stores for fraudulent charges using cards that lack EMV protection. Currently, the cardholder is responsible for dealing with any issues, though — as a courtesy — many banks do offer some degree of alerts and protections to help customers stymie attempts to take advantage of vulnerable information.
Although the cost of the changeover to chip reading technology has kept the United States from fully switching to EMV technology, many online credit card processing companies, such as BillPro, have already updated their systems to integrate with EMV technology. Better still, as more and more banks and stores begin participating, counterfeiting fraud is increasingly becoming a thing of the past.
Dip Instead of Swipe
Swiping is out; dipping is in. We’ve all stopped by a convenience store to purchase a snack. Remember that moment when the cashier rings up your items and tells you to wait until the blue arrows appear? It’s about to disappear forever. Instead, we’ll all be dipping our cards through the bottom of the reader, waiting patiently for it to read our information.
Change can be scary, but neither will we readily turn away help when it offers to protect our hard-earned money. EMV technology isn’t trying to monitor your spending, nor to steal from your bank account. Rather, it’s the latest technological advance down the path to global integration. Consider yourself lucky — the bank vault just became more secure.