Money Smarts Blog
Chip-enhanced cards: what you need to know
May 2, 2018 | Amanda Spurgeon
After numerous large-scale data breaches in the past few years, many U.S. card issuers are making the switch to new technology that’ll improve payment security, making it more difficult for fraudsters to successfully counterfeit cards. EMV (which stands for Europay, MasterCard and Visa) is the global standard for chip-enhanced credit and debit cards that use embedded computer chips to process transactions in a way that’s nearly impossible to duplicate.
At IHMVCU, we want to provide you with the most up-to-date security features available. We made the switch to chip-enhanced credit cards in 2015, and we’re finishing our transition to chip-enhanced debit cards this year. As we get ready to make the switch, we want to make sure you have all the details about this new technology.
You’ve heard people talking about them and you’ll be using one soon, but how much do you really know about chip-enhanced cards? We’ve assembled some frequently asked questions to help you understand how this new technology works, how it protects your information, and how the switch will affect you.
How is a chip-enhanced card different from a magnetic-stripe card?
The magnetic stripe on the back of traditional credit and debit cards contains unchanging data—like your card number, expiration date and CVV code. If a fraudster gains access to that data, they have all the information they need to duplicate your card and start making purchases.
Chip-enhanced cards, on the other hand, contain an embedded microchip that creates a unique, one-time use transaction code every time the card is used. If a fraudster steals information from one specific transaction, they can’t duplicate the card in the traditional way. Because the chip creates codes that can only be used one time, attempting to reuse a transaction code would likely result in the card being denied.
Chip-enhanced technology won’t stop hackers from stealing data, but it’ll be much harder for them to profit from the information they steal.
How do I make purchases with a chip-enhanced card?
Instead of swiping to pay, like a traditional magnetic-stripe card, chip-enhanced cards use a process called “card dipping.” Chip-enhanced cards are inserted into the terminal, and the chip sends data back to the issuing financial institution where the unique transaction data is created.
Card-dipping takes a little longer than the traditional swipe method—the card has to stay in the terminal for the whole time the transaction is processed. If you take it out too quickly, the transaction will be denied.
Can I use a chip-enhanced card at a retailer that doesn’t support EMV technology?
If chip terminals aren’t available, you can still use your card to make purchases. Right now, chip-enhanced cards are backwards compatible, meaning they still have a magnetic stripe that can be used at traditional terminals.
If you’re unsure whether you should dip or swipe your card, the terminal will walk you through the process. If you dip your card into a chip reader that isn’t activated yet, an error will appear prompting you to swipe your card instead. Same goes if you swipe your chip-enhanced card at a chip terminal—the terminal will present an error prompting you to insert the card for chip processing instead.
Find out when your new chip-enhanced card will arrive and get ready to start making more secure purchases.