Chip Enabled Credit Cards Are Coming, But How Do They Work?

Tech Features

Over the past few weeks, you may have received new debit and credit cards equipped with a chip that supposedly makes your information more secure. The EMV (Europay, MasterCard, and Visa) cards will be the norm from now on and will be accepted at more retailers in the coming days.

But is it really more secure than the tradition “swipe” cards we are used to? The chip on the front assigns a unique code to every purchase you make that changes every time you use it. This makes it harder for thieves to steal the code and make purchases. In addition, the chip is much harder and some are saying that it is impossible to duplicate than magnetic stripes.

It’s not all that different than what you’re probably familiar with, Instead of swiping the card at checkout like we have been doing, we insert the card, chip first, in the slot and leave it there until it prompts you to remove it. Depending on the card, you will still have to sign your name or enter your PIN while your card is in the reader. The whole thing should take about five to ten seconds to complete.

A common worry is that not all retailers have a chip enabled machine. However, your card still has a magnetic strip on the back so you can use it traditionally until they transition over to the new machines. Visa and MasterCard set an October 1st, 2015 deadline for retailers to transition over to accepting both chip and magnetic stripe cards, but some have not made the jump.

Another worry is over fraudulent transactions. If fraud occurs at retailers without chip enabled terminals where you have to swipe your card, then banks will not be held liable and retailers will be on the hook for the charges. However, if for some reason fraud occurs when using a chip enabled terminal (even if you swiped your card), the fraud liability will not change and your credit card company cannot make you pay more than $50.

Be extra cautious when using your card at the pump as gas stations have until October 2017 to install chip enabled machines. When it comes to online shopping, you can still enter your card number normally like you have been doing and the card will still work at retailers that support NFC technology for mobile payments.

It will take a while for retailers and consumers to transition over to chip cards but it will happen nonetheless. European countries have been using the technology for years, and it’s about time the United States catches up.

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