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Step Up Your Security with Chip Cards

Credit cards with chip technology are making their way to the U.S., offering enhanced security for in-person transactions.

By: Navy Federal on May 7, 2015

Following huge data breaches at major retailers and hotel chains, interest in chip-enabled credit cards has surged. While these cards are new to most Americans, major credit card companies have been transitioning to the new technology for some time. That's because chip cards are a safer way to conduct financial transactions at retail locations, helping to reduce fraudulent charges.

Coming to Your Wallet

First introduced in France in 1992, chip-enabled cards have been the standard in Europe and Canada for years. The United States has been slower to adopt the technology, reluctant to replace expensive payment terminals and ATMs that use magnetic stripe technology. But that's all about to change. Most major card issuers are now transitioning cards and card readers to smart chip technology.

How They Work

Chip cards, also called EMV cards (named for the original developers of the chip technology: Europay, MasterCard®and Visa®), are cards embedded with a microchip. This feature makes it more difficult to replicate payment information than others equipped with traditional magnetic stripe technology. Traditional magnetic stripe cards store static data, which can be easily replicated and used to create a counterfeit copy of the card. Chip-enabled cards are inserted into a card reader, rather than swiped. The embedded microchip creates dynamic data unique to each transaction. This data is then verified by the seller's chip-enabled card reader to ensure authenticity.

How to Use Them

At chip-enabled terminals, insert your card into the reader, follow the instructions and then remove the card when prompted.

If the merchant doesn't have a chip reader, or if it isn't yet enabled, simply swipe your card as usual.

What to Expect

Navy Federal and other financial institutions will be reissuing chip cards to replace their current credit and debit cards gradually over the next few years.

The new card will look just like a traditional card, with the noticeable addition of a small microchip embedded along with the standard magnetic stripe. That way, you can use the same card even if a merchant hasn't yet upgraded their payment technology.

If you want to receive the extra security benefits of your chip card, make sure you insert it into a chip-enabled card reader. Remember—if you have a choice, insert rather than swipe for maximum protection!

Get more information about the new Navy Federal chip cards.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.