What’s With The Chip?

No, I’m not talking about Lays, Utz or Pringles. I’m talking about the small, metallic square that you may have seen on debit and credit cards. That chip is what sets new cards apart from those of the previous generation. These updated EMV cards use new technology that helps protect consumers. They were introduced in the wake of numerous large-scale date breaches and increasing rates of counterfeit card fraud. According to CO-OP, credit card fraud has more than doubled in the U.S in the past 15 years. Although they have been the global standard for a while, EMV cards are still fairly new in the U.S. And because of that, I’ve put together a list of what you need to know about the chip.

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You Won’t Be Swiping Anymore

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Instead of swiping the old and outdated magnetic strip, you are going to do what is called ‘card dipping’ instead. You’ll simply insert the card at the bottom of the payment terminal and wait for it to process. The transaction will take a bit longer than the traditional swipe, but it is far safer. Unlike the magnetic strip, chip cards create tokens, unique transaction codes that can’t be used again, making them useless to counterfeiters. Older cards contain unchanging data that reveals almost all of the information needed for most fraudulent card-not-present transactions.

EMV Cards Are Changing Liability

Credit unions and banks have traditionally been liable for fraudulent transactions in stores. But now that EMV cards have been issued, that will no longer be the case. It will now be the responsibility of the merchant. It’s extremely important for business owners to become EMV-compliant, and even more so for small businesses. Any data breaches could be very costly.

Chip Cards Are Difficult To Duplicate

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Magnetic strip cards have static data, making them susceptible to skimmers. A skimmer can be made for as little as $20. On the other hand, the data on chip cards is constantly changing, which makes is difficult to extract. Manipulating your financial institution’s information after altering the physical chip circuit is no easy task — nor is it cheap. The high-tech equipment it requires can cost over $1 million, making it an impossible task for your average fraudster.

You Can Take Advantage Of Near Field Communication

Card dipping won’t be your only option when it comes to making purchases. EMV can also support contactless card reading, which is also known as near field communication (NFC). You can simply tap NFC equipped cards against a terminal scanner that can pick up the card data from the embedded computer chip. It’s quick and easy, making NFC the more consumer-friendly option. A quick tap and you’ve made your purchase!

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You Can Still Swipe Chip Cards – For Now

Many of today’s EMV cards still have the magnetic strip functions. This is because not all merchants can read the chip yet. Most large retailers have upgraded their systems to be EMV-friendly, but the magnetic strip can still be used at stores that are not. You can still conduct transactions, but you lose that extra level of chip security. The magnetic strip, which was introduced in the 1960s and has become outdated, will eventually be completely replaced by the chip. So when your current card expires, opt for the EMV card! And if you have any other questions, let me know!

Do you have an EMV card yet? I’d love to know!

Take care,

Jake