All About EMV Chip Cards

Security and Scams

Are you a swiper or a dipper? Chances are, you have at least one EMV (Europay, Mastercard, and Visa) chip-enabled card in your wallet.

Here’s what you need to know about the new generation of cards.

1.) Increased protection against fraud

The main reason behind the switch is to curb rampant credit card fraud. Experts pin the high rate of fraud on the outdated magnetic-strip system the U.S. had been using. Magnetic strips store static, unchanging data. Whoever gets their hands on that data can then do anything with it.

In contrast, EMV cards create a unique transaction code for each purchase you make. That code cannot be reused. Even if a fraudster steals the chip information from a transaction, they won’t be able to use it for another purchase.

2.) How it works

EMV chip cards are processed through card-reading and verification.

  • Instead of a quick swipe, you’ll be asked to insert, or dip, your card into a terminal slot and leave it there as the transaction is processed.
  • When your card is dipped, data is transmitted from the card chip and the issuing financial institution to verify the card’s legitimacy and create the unique transaction code. This process takes longer than a swipe.
  • After you’ve inserted your card, you may be asked for a PIN or a signature which will be transmitted to the payment terminal for verification.
  • If your merchant doesn’t have a chip-card reader, your EMV card can be swiped. Also, if you’re unsure of whether to dip or swipe, the terminal will guide you.
3.) Fraud liability changes

The shift to EMVs presents several changes for merchants and financial institutions. Issuing new cards and purchasing new processing technology is an expensive undertaking. But there’s more than just cost involved – the switch brings new liability rules.

Also, chip-card fraud is difficult but still possible. Since Oct. 1, 2015, the liability for card fraud has shifted to whichever party is the least EMV-compliant in the transaction.

4.) Increase in online fraud

The EMV transition has spiked online fraud. Chip cards or magnetic stripe, for online purchases, has no difference. When buying something online, it’s your responsibility to take security measures.

Never give personal information by email or authorize a wireless money transfer for a merchant if you are not familiar with them. Also, if possible, choose tokenized systems like ApplePay.

 

SOURCES:

http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php

https://www.paymentssource.com/opinion/how-to-turn-emvs-false-sense-of-security-into-real-safety

https://squareup.com/townsquare/emv

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