Chip cards versus the older swipe style of credit cards explained.
Money & Finances: Banking
Money & Finances: Credit Cards
Money & Finances: How-To
With an increase in international travel and credit card security breaches making headline news, most consumers are now aware of EMV chip credit cards. Although new to Americans, this technology has been used to process transactions in most other countries for years. Here is what you need to know about it and when you need to make the switch.
What Is It?EMV chip technology is simply a different way of storing a credit card's information than the traditional magnetic strip. The advantage to the chip is that it makes it virtually impossible to duplicate a credit card using a skimmer or other device. Instead of swiping a chip card, consumers insert it into a card reader. The card is then validated using either a PIN or a signature.
Chip And PIN Or Chip And Signature?
Chip and PIN cards are accepted most widely. These cards function similarly to debit cards in that a PIN is required to complete all transactions. Because they can be verified without a human attendant present, they are accepted at locations such as parking garages, transit centers, and gas stations. Unfortunately for U.S. residents, only a small handful of domestic cards are available with chip and PIN technology. Most U.S. credit card issuers are offering chip and signature cards, though, and these cards are accepted at most locations where an attendant is present.
What If You Don't Travel Abroad?If you don't plan to travel abroad anytime soon, you can ignore EMV chip technology for now. However, the technology is being phased into use within the U.S. and is expected to be fully implemented within the next two years. The transition should be complete by October 2015 when liability for fraudulent transactions made with magnetic strip cards will switch from issuing banks to the store that accepted the card. Credit card issuers will be sending new cards with EMV chip technology to all customers in late 2014 or early 2015.
What About Online Transactions?Because physical card duplication will become virtually impossible once magnetic strips are phased out, many analysts are predicting a huge increase in online credit card fraud. Most banks will still continue to offer zero liability for fraudulent online transactions. However, the days of simply typing in your credit card number on an order form may be over. Many European customers are being issued handheld card readers that connect to their computers and must now swipe their card just like they would in a physical store. Other card issuers are issuing devices that generate temporary PINs to use to complete online transactions.
How Do You Get One?
First, go to your credit card issuer's website to see if they offer credit cards with EMV chip technology and which cards it is available on. You don't want to start with a phone call or online chat because many customer service representatives don't know what EMV chips are -- especially if that issuer doesn't offer them -- and will often think you are asking about tap and pay devices or something else when they agree to send you a chip card. Once you've determined your bank does offer EMV chip cards, be sure to clearly ask for "an EMV chip and PIN (or signature) card for international travel." This will help reduce the risk of your request being lost in translation.
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