EMV Chip Technology in the US

You walk into a place of business and politely request your desired goods or service. Merchandise is exchanged and you reach for your preferred method of payment, “plastic”! Who carries cash these days? You hand over your credit or debit card, and within seconds you are on your way. Have you ever considered exactly how secure your transactions really are? Has it ever occurred to you that perhaps your card information is being copied, stored, or stolen for later use? Fraud has doubled in the past seven years here in the U.S. due to our lag in security and delay in updating our credit card technology. With the new EMV technology, all of that will change. Being the last major market using the magnetic strip cards, the U.S. is in need of a swift transition to catch up to the security and state of the art technology of the rest of the world. So what is EMV technology and what does it mean for you?

EMV is short for Europay, MasterCard, and Visa. This acronym accurately represents both the origin and purpose of the card itself. EMV cards contain a small but “smart” computer chip that distinguishes them in many ways from their magnetic strip bearing relatives that are still most commonly used here in the U.S. The new cards will make it much more difficult to carry out fraudulent transactions, therefore minimizing the cost of credit card and identity theft to both the victim and the merchant. The new technology is housed inside a small computer chip that is lodged within a credit or debit card. This chip, however, operates completely differently from the magnetic strip we Americans are more accustomed to. There are a number of differences between the two. But, where they differ most, in terms of card security, is in how transactions are processed. A traditional magnetic strip card’s data can easily be copied and used again and again because it does not change from one transaction to the next. However, EMV chip technology prevents this type of fraud automatically by generating a new and unique transaction code each time it is used.

While the added security may make things more secure for consumers, there are some time consuming and costly adjustments merchants must make in order to accommodate and accept EMV, which may not bode so well with some. New point of sale card readers will be required in order for merchants to accept the new card technology as the new card chips are not read in the same way as the magnetic strips. It is estimated that by October, 2015 consumers can expect a major shift to the new technology. Many Americans have already received a card with an EMV computer chip inside. Major credit card issuers and banks plan to roll out the new technology gradually, replacing expired magnetic strip cards with the new EMV chip technology first. By the end of 2015, credit and debit card users can anticipate approximately 70 percent of credit cards and 40 percent of debit cards to support EMV chip technology.

So how, exactly, does this new technology work? Ironically, it works more like a magnet than the magnetic strip that is currently so commonly used. Rather than a swipe of the card, the new chip will require either a “dip” or a “tap” to process a transaction. Either of these motions will allow the card’s chip to pass information to the issuing financial institution so that the card holder’s legitimacy can be quickly verified and the transaction processed. This will require some patience on the part of the customer as EMV chip transactions will take just a few moments longer than the current magnetic strip method. However, the added security and identity protection are well worth the wait.

Have you received your new EMV chip card yet? If so, what has been your experience with transactions and point of sale use of the card? Are you confident in the added security of the card? Leave your comments, questions, and concerns below.

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