New EMV Chip Cards Coming Soon, Here’s What You Need To Know

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I approached the counter with my souvenirs. I immediately noticed that there would be a language between the cashier and I. I handed her my credit card hoping we wouldn’t muddle in conversation and just get the transaction complete. I figured my credit card would work in Europe, but boy was I wrong. She had no clue how to slide it through the machine.

Out of cash at that point, I sheepishly put my purchase back, clearly unable to explain that my card was fine, but it required a different card reader.

This is when I first realized that the magnetic strip carrying cardholder information on the back of credit cards in the United States is considered outdated technology in Europe.

Now, hoping to combat data breaches and make consumer card information more secure, many American banks and credit card companies are adopting the technology and sending new chip cards out to credit card holders.

First, what is a chip card?

Chip cards, also known as EMV cards, look similar to regular credit cards, but they carry a microchip that encrypts your account info into a unique code that changes for each transaction. Until this technology is widely adopted, cards will also have the traditional magnetic strip to be used when chip card readers aren’t available.

But there is a deadline to keep all parties on the same page.

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MasterCard, Visa, Discover and American Express have set an Oct. 1, 2015 deadline for merchants to switch to the new card readers. After this date,  the liability in all credit card breach situations would be transferred to the non EMV-compliant party. The threat of substantially higher costs may push some merchants to make the change, but others are likely to struggle with the cost of changing technology.

How does it protect the consumer?

The magnetic strip on the back of a regular credit card is composed of magnetic particles that come together to represent some very important information: your name, account number, card expiration date, and the 3-digit security code you usually find on the back of the card.

Once this information is stolen, it can be used to create new cards with the same information and same purchasing power – all under your name. Many purchases can even be made without the extra step of signature verification, allowing thieves to quickly rack up hefty bills.

Since EMV cards create a unique code to represent important card information for each transaction, thieves who manage to steal the code won’t be able to replicate the card for future purchases.

However, not everyone is convinced that the way in which the United States is adopting the chip technology provides the best protection possible for the consumer.

The cards being distributed now either contain chip-and-signature technology or chip-and-PIN technology. Chip-and-PIN technology is considered by many to be much more secure since inputting your PIN number adds another layer of information thieves have a tough time gathering.

Unfortunately, many cards being issued in the United States have the chip-and-signature technology. Signatures are considered much easier to replicate and often go unchecked by merchants.

So while doing away with the magnetic strip seems to offer consumers greater protection, it still leaves the door slightly open for thieves to stay in business.

What do you need to know?

Perhaps the biggest problem with chip cards in the United States right now is the lack of places to really utilize the technology.

You may have already gotten your new card in the mail, but if you’re anything like me, you barely noticed the change and continued to utilize the card the way you always have — by sliding the magnetic strip through the reader.

As we inch closer to this Oct. 1 deadline, notice the retailers with the new technology and utilize the chip technology whenever possible. This will at least make that purchase slightly more secure than the ten others you recently made with your magnetic strip.

Also, if you plan on traveling abroad and bringing your new card with you, know that the technology might not be as compatible as you think. European countries, for example, largely use the chip-and-pin technology and don’t have the ability to let you sign if your card carries the chip-and-signature technology. Many merchants will still allow you to swipe and sign the old-fashioned way, but automated machines – at gas stations or ATMs – might not allow the transaction.

Most importantly, do your research. Know the technology your card utilizes and the protections it offers. Being a smart consumer is your first defense against fraud of any kind.

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