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Why Do New Credit Cards Have EMV Chips?

posted on February 12, 2018 in Technology

Everything you need to know about EMV credit card chips

 

Magnetic Stripes

What ever happened to swiping credit cards? Wasn’t that easier and faster for everyone? It was. It was actually too easy. Eventually, counterfeiters caught on and started copying data from the magnetic stripes (magstripes) to make phony cards.

Preventing Card Fraud

So, U.S. card issuers evolved. They replaced the static-data magstripes with actual computer chips known as EMV—the new Europay, Mastercard and Visa standard. These computer chips create unique transaction codes that can’t be used twice. Because the data is different every time, transactions can be authenticated. Skimming (stealing) a card’s transaction code does hackers little good as it will be recognized and denied when used in future transactions.

EMV chip cards infographic

Source: ABA.comTexas Citizens Bank is a proud member of the Americas Bankers Association.

Hi-Tech Transactions

While currently more cumbersome than the old system, this new transaction is much better for consumers in the long run. Not only does the smart chip improve personal security, it also allows for more efficient checkout systems in the future.

Card Scanning

While you’ve probably only inserted these new cards into chip readers, that’s not the only way EMV chips can be read. EMV chips also support contactless card reading. This requires a special radio-frequency ID scanner not many retailers use. However, once EMV is fully adapted (we’re now on our third year since the switch), credit card issuers will do away with the magstripe altogether and more of these one-tap card scanners will become available to consumers.

Fooling the Forgers

Since the dawn of time, people have been finding new ways to forge money—coins, cash, now credit cards. Think of the EMV chip as a hi-tech watermark. Instead of holding your bill up to the light, future-forward venders will ask you to hold your card to a radio-frequency ID scanner to authenticate. Who knew we’d eventually be using radio waves to verify payments?

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