If you have a credit card, you might have been receiving a replacement card in the mail with a little chip. So how exactly does this affect you? The EMV, or “smart” credit card will soon be the standard. Here’s the low-down on how it works and how to use it:
What is the EMV chip?
The EMV chip is little square chip that’s embedded in your credit card. It features built-in technology that is new security standard for card-present payments in the U.S. While cards with magnetic stripes only process a limited amount of data, cards with the smart chip process dozens of bits of information. As a result, your transactions will be more secure, granting you greater peace of mind.
Why is it in my card?
The main purpose of the EMV chip is to prevent fraud when making in-store purchases with your credit card. The magnetic strip on your card contains a lot of sensitive information that doesn’t change, making it easier for that info to be stolen and used to make fraudulent purchases. However, with EMV credit cards, there is built-in cryptography that makes it nearly impossible to create a counterfeit card. “EMV chips help consumers by creating one-time-use payment codes every time they dip their card,” explains credit card expert Sean McQuay of NerdWallet. “So if a hacker were to steal that payment info, they wouldn’t be able to use it.” Although there is some vulnerability in keeping the magstripe or relying on signatures alone, it’s an important weapon to add to the arsenal against fraud.
How does it change things for me?
If you’ve traveled abroad to Europe or to the U.K., you might already be familiar with how the new cards work. Instead of swiping and signing, which you do with a traditional magnetic credit card, with EMV credit cards, you’ll insert the card into the terminal and leave it in for the entire transaction.
What are some tips for using my new card?
As a full rollout most likely won’t happen until 2017, you’ll probably still be swiping and signing to make some purchases. It’s important to know that this added level of protection works only for in-store purchases. “The technology only adds security when a consumer dips a chipped card into an EMV-ready terminal,” explains McQuay. So it’s important to practice the same precautions should be used when making an online purchase.
As credit card fraud has more than doubled in the U.S. in the last 15 years, the EMV credit card is a big step forward at efforts in protecting your information and making in-store credit card transactions more secure. With this information in hand, you can feel more at ease when making purchases with credit.
The transition to EMV chip cards is underway. Click here to learn how they work and what you need to know to get started.