Why Does My Card Have a Chip?

If you haven’t already, you will soon be getting a credit or debit card in the mail with a chip. Chip cards - also referred to as “smart cards” or “EMV cards” - are currently used in over 130 countries and have been around since early 2000’s. Countries that have switched over to the chip have seen a significant decrease in credit card fraud. It was only a matter of time before they were introduced in the U.S., especially after the massive data breaches experienced by some major retailers.

Why am I getting a new card with a chip?

Using a card with a chip helps to make your transactions more secure, significantly reducing the risk of fraud.

Many banks and retailers have already started switching over. Expect to see more and more jump on the bandwagon after October 1st. This is because MasterCard and Visa have made the decision that whoever has the less secure technology - bank or retailer - will be responsible in the event of a hack or fraud.

How to use a credit card with a chip?

You can use your card at any terminal equipped and activated to read the chip. Just insert it into the slot, follow the prompts on the screen, and remove the card when instructed to do so. If the store is not yet set up with the proper terminal, you can swipe your card the way you always have.

How does a chip card work?

When a card is inserted into the terminal, the chip creates a unique code that is transmitted between the issuing bank and the store. The code is unique to each transaction meaning it is harder for someone to copy your card and make additional purchases.

Due to this added security you’ll notice that the chip readers take longer than the swipe you are used to. However, it’s all for your protection.

What is the difference between chip-and-PIN or chip-and-signature?

Simply speaking, the chip-and-PIN have a pin you enter with a purchase, while chip-and-signature will require you to sign. PIN is the ideal choice as it is much harder to hack a PIN, than to forge someone’s signature. But this decision is on the retailer’s side for now.

The chip card does not solve all the fraud issues

Introducing the chip cards is a huge step towards more secure purchasing in the United States. However, it is important to note that the chip card’s security features will not be fully utilized until all the stores and ATM’s have converted to the system. This will take some time, but expect to see more and more transition over the next year.