Chip Card Technology
In your wallet, you may have a credit card embedded with a microchip. This chip technology, also referred to as EMV® (Europay, Mastercard® and Visa®), helps protect against fraud and is becoming the new standard in credit cards. Here is what you need to know:
- Each sales transaction is unique: The information stored within the magnetic stripe on a standard credit cards is static, making it easier for counterfeiters to gain access to this data connected to the card and cardholder. Computer chips in these cards create a unique code for each sales transaction. Counterfeiters can’t duplicate or use this code again.
- Fraud may decrease: While computer chip technology won’t eliminate data breaches, the unique sales data for each transaction makes stealing information much more difficult.
- You dip or tap instead of swipe: You’ll insert your card into a slot at the checkout terminal or hold it against the machine if the card is contactless. This process enables transaction information to be exchanged between the card chip and the credit card issuer. If you happen to shop at a retailer that hasn’t yet upgraded to chip-reading technology, you can still swipe the card’s magnetic stripe. Eventually, credit card companies will phase out magnetic stripe cards.
EMV is a registered trademark in the U.S. and other countries, and is an unregistered trademark in other countries, owned by EMVCo.
Chip and Signature vs. Chip and PIN
The majority of U.S. credit cards embedded with computer chips are currently programmed to require a signature for verification. This is identical to how you currently sign for a purchase made with a credit card that has a magnetic stripe instead of a computer chip. This type of card is generally referred to as “chip and signature.”
Another type of chip card is called “chip and PIN.” These cards are also embedded with computer chips, but they require you to enter a 4-digit personal identification number (PIN) to authorize the transaction. Chip and PIN cards are considered more secure because the PIN must correspond to information contained in the chip. A person would have to know your PIN in order to fraudulently use your card. You and your credit card company should be the only ones who know the PIN.
Contactless Payment Technology
Contactless payment technology uses wireless technology to transmit data between two different devices, such as a credit card or smartphone and a credit card terminal. Here is what you need to know about this increasingly popular technology:
- Each sales transaction is unique: Contactless payment methods generate a unique code for each sales transaction. Counterfeiters can’t duplicate or use this code again.
- You tap instead of swipe: When you tap a contactless payment method against a scanner or hold it in close proximity, data flows between the card and the credit card issuer. This process verifies the card’s legitimacy and creates unique sales data for the transaction. (You can still swipe a card’s magnetic stripe until these cards are phased out.)
- You can use your phone instead of a card: Apple Pay™ and Google Pay™ are two mobile versions of contactless pay. With mobile wallets, you don’t actually store your credit card information on your phone. Instead, you generate a unique number based on information you submit that proves you own the card. When making a transaction, you use fingerprint verification or a passcode to access the data and then tap the phone to the scanner.
- Fraud may decrease: The unique sales codes of contactless pay cards make it more difficult for hackers to profit from the information they steal.
Apple Pay is a trademark of Apple, Inc. Google Pay is a trademark of Google LLC.
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