You may have noticed new credit and debit card readers at many of your favorite stores, and your financial institution probably sent you a new card recently that was embedded with a microchip. This is due to a law requiring merchants and financial institutions to switch card processing systems to provide consumers with more security. Here is what you need to know about the new chip cards!
A chip card has an embedded microchip. Each time your chip-embedded card is used at a chip-activated terminal, a single-use code is created to validate your purchase – protecting you from fraudulent activity. Stolen chip card data cannot be used to create counterfeit cards.
With a traditional magnetic stripe card, the data on the card is always the same. If fraudsters get the card information through a data breach – meaning they hack into the merchant’s systems – they can keep using the information over and over until the card is canceled. With a single-use code being used, the information provided to the merchant changes for each transaction. If there is a data breach, the fraudsters will only get the single-use information, so you will be protected from fraud. Chip cards are also more difficult to print, which makes it harder for criminals to make a copy of your card.
EMV vs. RFID
There are two types of chip cards – EMV (Europay, MasterCard, and Visa) and RFID (Radio Frequency Identification Device). Many people don’t realize that these two card types are different and use the terms interchangeably. EMV cards are the type used in the U.S. EMV cards are inserted into the card reader, and based on the merchant, you either enter a PIN or sign for the purchase.
RFID cards are more common outside of the U.S. They use radio frequencies to transmit the data to the card reader, so you do not need to swipe or insert the cards. To use your debit or credit card, you would simply hold it near the card reader. RFID cards need to be stored in a foil sleeve or foil-lined wallet when not in use because fraudsters can use portable RFID readers to scan the card information when it is in your pocket or bag. Because of the dynamic authentication, the fraudsters can only use the information once. Although it does not eliminate fraud, RFID cards do reduce it.
How to use an EMV card
Using an EMV card is pretty simple but a little different than using a magnetic stripe card. Rather than sliding the card through the card reader, you will insert the card into a slot. While the transaction is processing, the card will stay in the card reader, and you will be alerted when it is safe to remove the card. It is easy to forget the card in the machine, so check for it before you leave the store or ATM. If you do accidentally leave your card, it is important to cancel the card to prevent any unauthorized transactions. Even if you get it back, it is still a good idea to cancel it. There is no way to know who could have written down your card number before it was returned.
Many stores have not fully switched to EMV technology, and cards still have a magnetic stripe option. If a store has switched to accepting chip cards and you use the magnetic stripe, the card terminal will prompt you to insert your card to finish your purchase. Although transactions take a little longer, chip cards offer better security. If you don’t have a chip card yet, reach out to your financial institution to request one!