What are EMV ‘Chip’ Cards?

At check out, some of you may have noticed changes in credit card processing machines. Instead of sliding your card across the top, you slip your card into a reader at the bottom, and it reads a chip on the top of your card.

Increasingly, credit card companies are adopting EMV ‘chip’ technology, given the prevalence of debit card fraud. This is a move many European countries made years ago that has shown to significantly reduce the amount of fraud.

How does it reduce fraud?

The chip stores your information as a magnetic strip would; however, at check out, the chip produces a one-time code unique to that transaction. As a result, if someone were to steal your payment information, they would be unable to reproduce the one-time code to verify the card’s authenticity.

Do chips completely prevent fraud?

No. Once your credit card information has passed through a retailer’s system, it is still vulnerable to database breaches. Additionally, chips do not eliminate online credit card fraud. (Visa and MasterCard are developing technologies to combat the latter issue.)

How widespread is chip technology?

Major banks have switched to chip technology, but retailers are slower to implement chip-compatible technology; however, by October 2015, merchants are required to be chip technology compliant or will be liable for any losses customers experience as a result of fraud.

Source: moneyning.com