Have you noticed the new chips embedded in your credit cards? You may have even experienced paying with your new card at a store. Cards without the chip use a magnetic strip on the back to permanently store your financial information, making it an easy target for data thieves to simply scan your card and capture your information. Forty-seven percent of the world’s credit card fraud occurs in the U.S.
The chip in these new cards creates a unique transaction code that can’t be used again. Unlike scanning the information off a magnetic strip, if a hacker should steal the chip information from a single transaction it would be useless for any future transaction.
Here’s what you need to know about the new cards, according to the consumer engagement editors at the Credit Union National Association:
• The new debit and credit cards work exactly the same, but now they come with an integrated microchip that helps protect your financial information at chip-enabled terminals.
• Chip cards are the new security standard worldwide.
• When you receive a chip card, you’ll also receive information about how it’s different than your old card, its enhanced security, and how to use it. Card issuers have discretion about whether they’ll require you to use a signature when making payments or to use a PIN (personal identification number).
• The transaction process will be slightly different. You’ll insert your chip card in a POS (point of sale) terminal, wait for it to be authorized, and remove it. You’ll either sign a sales draft or key in your PIN to complete the transaction.
• Other countries likely will stop accepting mag stripe cards after a certain date. You’ll need a chip card when traveling abroad, and international travelers in the U.S. will have the additional protection against counterfeit that these cards afford.
• It’s possible that some merchants and card issuers may choose not to convert and will continue to use mag stripe technology for a time. Your card still will work at the checkout and consumers will continue to be protected from fraud liability.