Most new credit cards have a EMV chip built-in, but what is it for? The credit card chip reduces the chances of fraud and changes the way you make your daily purchases. Next we explain how cards work with this technology.
- 1 What is an EMV chip?
- 2 What does EMV stand for?
- 3 Why is it important for you to have an EMV chip credit card?
- 4 Chip and Signature vs. Chip and PIN: What’s the Difference?
- 5 EMV chip security explained
- 6 Are chip and signature cards as secure as chip and PIN cards?
- 7 Other ways to protect yourself from credit card fraud
- 8 In summary
What is an EMV chip?
In October 2015, a big change occurred in credit cards. American consumers joined Canadians and Europeans in change swipe-and-sign cards to chip-and-signature cards equipped with EMV chips.
The use of EMV technology shifted the responsibility for fraudulent transactions from the issuer to the merchant in case the card has an EMV chip and the merchant does not support chip transactions. Since then, merchants have had a real incentive to support EMV chip technology.
These cards can be identified by the small silver or gold EMV chip embedded in the front face of the card. You’ll usually find it on the left, just above the numbers.
You won’t need to look far to find a chip card, chances are you already have one in your wallet. According to the Visa Chip Card Update released in March 2017, there are 421.1 million Visa® Chip Cards in the US alone, 164% more than the previous year. There has also been a 409% increase in merchants accepting chip cards since the start of the EMV migration in the US.
What does EMV stand for?
EMV is an acronym for Europay, Mastercard and Visa. The EMV chip is the global standard used for credit card chips around the world, and more than 90 percent of credit card transactions in Europe, Canada, Latin America, Africa and the Middle East are now EMV.
Why is it important for you to have an EMV chip credit card?
In a practical sense, having an EMV chip on your credit card changes the way you shop. As you’ve probably already experienced, merchants now require you to insert your card into a chip reader, rather than swipe the magnetic stripe on the back of the card.
But the EMV chip means much more than a different way to pay. The chip processing method makes your transactions more secure and can help reduce credit card fraud. We’ll talk about that later, but first let’s talk about the different types of chip cards you can find.
Chip and Signature vs. Chip and PIN: What’s the Difference?
Most cards are considered chip and signature cards. After inserting the card into a chip reader, you may be required to sign for your purchase.
The other type of card is the chip and PIN, with it You must enter a PIN (Personal Identification Number) to complete your purchase. When PIN entry is not supported by a merchant’s system, the merchant may ask you for a signature.
In the past, it was very important to have a chip and pin card when traveling in Europe and other parts of the world. To complete transactions at automated vending machines, such as those at train stations, a PIN was required. Currently, this is not a big problem because many kiosks will allow you to bypass the PIN prompt.
However, there are still some situations where you may be forced to use the local currency or find an ATM in order to complete your transaction. If you are a frequent traveler, you may need a chip and PIN card at some point.
EMV chip security explained
As explained by Chris Allen, founder of the technology company FirmTree, magnetic cards represent a considerable security risk. “Merchants only need the card number and expiration date for the transaction to complete,” he says.
Since the same limited set of numbers is used to authenticate each transaction, it’s easier for thieves to steal those numbers and make counterfeit cards out of stolen data.
On the other hand, “EMV chip cards provide more security than magnetic stripe and signature cards due to the unique code that is created for each credit card transaction.” This one-time random code is encrypted and extremely difficult for criminals to duplicate without expensive equipment.
So far, the change seems to be working. According to Visa, the total number of dollars stolen by fraud was reduced by 58 percent in December 2016 compared to the previous year. This enhancement was for merchants who upgraded to EMV chip technology.
Are chip and signature cards as secure as chip and PIN cards?
Chip and signature cards are considered less secure because they rely on merchants to verify that your signature matches the one on the back of your card.
Chip and PIN cards are more difficult to use fraudulently, since criminals must know your PIN to complete a transaction. However, even without requiring a PIN, chip cards are said to be more secure than credit cards without a chip.
Other ways to protect yourself from credit card fraud
Protecting yourself from credit card fraud requires a great deal of caution. “Consumers should keep an eye on their credit card statements and credit reports,” says Allen.
Immediately report any purchase you do not recognize and follow up to make sure you are not in the presence of a fraudulent transaction.
You should also make sure to protect all of your credit card details. Scammers often try to trick unsuspecting consumers by creating official-looking emails asking for credit card details, so always check the source before clicking on a link or replying to an email with information sensitive staff.
Credit card security continues to improve, and EMV chips account for a significant part of that improvement. Still, it is important to note that you are never completely safe, the risk still exists. Although personal transactions with a chip card are generally more secure, criminals can resort to more vulnerable transactions such as those made only with card data, this is the case of purchases over the Internet or by phone. This way they can continue to scam consumers.
The moral of the story? When you review your credit card statements, You must be aware of any unknown or suspicious movement in order to report anything that seems suspicious to you.