Card Security: What’s That Chip Doing There?

by Celeste Lohrenz

Credit and debit cards have become the norm for Americans as fewer shoppers opt to carry cash for day-to-day purchases. Swiping for gas, groceries and even train tickets has become second nature. However, the public’s reliance on this payment method has made card systems a rewarding target for hackers and has led to major data breaches at some of the nation’s largest retailers. Furthermore, hackers and cyberthieves have found ways of directly targeting the magnetic strips on the back of credit/debit cards, through use of scanner devices that allow the theft of card information without the physical card ever having left your pocket.

For those who have recently experienced a card theft or loss, you may have noticed something different about the new card your bank sent as a replacement. Now, new credit and debit cards will no longer transfer personal information through magnetic strips but through an embedded computer chip, called a Europay Master Visa (EMV) chip, on the face of the card, which is expected to be the nationwide standard by 2016.

So what is that little chip doing there anyway? Here’s what you need to know:

• What it is: The EMV chip you’re seeing (or soon will see) on the face of your credit/debit acts as a security vault for your card’s information. Over the years, the technology that card thieves use to tap into magnetic strips became so advanced that end users and merchants alike were at risk of having their private data stolen. To address this problem, major credit card companies like MasterCard and Visa found an alternative in EMV chips, which are not vulnerable to hackers’ current toolsets.

• How it works: As of now, and likely until all merchants have begun to accept EMV chips, cards work both through the magnetic strip and the EMV chip. Rather than swiping your credit card through a card terminal at the end of a transaction, you will insert your chip card into a machine that reads the specially made computer chip throughout the transaction. This new method allows your bank to monitor your card’s “security vault” during the entire transaction, affording it more data resource points for augmenting security.

If you currently have a card with an EMV chip, be sure to use it with merchants that accept this new technology to guarantee the safest transactions. Card holders who have yet to receive a new card with an EMV chip should contact their local card providers to upgrade their security features.