Arrival of New ‘Chipped’ Credit Cards

The New ‘Chipped’ Credit Cards are for ‘dipping’, what was traditionally for ‘swiping.’ Re-engineering of the cards comes with security advancements such as to render your card more resilient to fraud. Dipping your card is much more than the ancient salsa. This is so far the most advanced credit and debit card technology in the market; thriving owing to the reduced theft vulnerability.

Chipped Credit Cards

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You may have noticed the nano-chip embedded on the front-view of latest credit and debit cards. The EVM (Eurocard, MasterCard, and Visa) chip usability requires that the user does little practice, but it is bound to emerge second-nature very soon

How it works

Rather than swiping your card’s magnetic strip on the rear, you will have to insert the new ‘chipping’ credit card (a practice commonly known as dipping) face-up, to leap the security inherent in this new online banking technology. However, hope you do not mind giving the computer’s register and the EVM chip a chance to mingle.

There will be visual prompts on the screen, requesting you to verify the transaction details. For now, you may have to bear with signing the transaction on as the technology is advanced to incorporate PIN authentication. The old credit cards still command the United States market, at least for the next couple of years.

Remember to take back the credit card with you, once the transaction is over. The dipping process is, however, much slower than its swiping predecessor but not long enough to have you uncomfortable. For more details on the nitty-gritty of the new dipping cards, Chase Bank uploaded an informative video demonstrating how they work. The process is, however, similar irrespective of the card issuer.

Do not expect cards usability to change akin to sharing your phone number over the net. Moreover, you will still need the card number, expiry date, and the rear code, just as you currently do.

What lead to the advancement

Ever wondered why you need the new chipped credit and debit cards? Well, it is more about the banks’ security rather than yours. Nilson Report, an acknowledged trade publication in the payment industry, reported that banking software fraud cost card issuers approximately $3.4 billion and $1.9 billion for merchants in 2012 in the United States alone. Such massive losses have convincingly pushed the bankers to migrate the dipping chip technology; the upgrade will cost them a staggering approximately $8 billion.

Most recently, card issuers often covered for most of the fraud cost. However, the burden of servicing the fraud currently rests on the least chip-enabled party. Gas stations are an exception and have until 2017 to adopt the chip cards. Hence, once your bank issues a chipped card, no merchant could tap into your cards authentication system. You could still swipe the card, but it is up to the concerned merchant to refund the card user if the fraud’s origin is the transaction. In either way, you will not bear the cost of fraud.

Preventing ‘skimmers’

The main security flaw in traditional cards is the magnetic strip on the card’s rear. Your card’s information is usually hard-coded in that strip; swiping the card typically allows merchants to read the card’s data. This is a major security loophole since it allows anyone with the right technology to read your personal information; they can after that reproduce it and consequently generate fake card instances. Skimming is the famous criminal enterprise where an attacker gathers card users’ data and consequently use or sell it to some 3rd party who compromises your account.

The new chipped credit card is designed to eliminate these security issues. Every time you activate the chip-enabled card, a unique captcha code is generated; such that if an attacker figures out how to reproduce your code, it won’t suit them, since it can’t be reused. Canada and Europe have witnessed a dramatic reduction in fraud rates over the years chip-enabled cards have been in use. With the chip in hand, you rest assured to utilize its advanced features once you travel to nations that have standardized chip cards. The United States is so far the last industrialized nation to incorporate the technology.

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Ultimately, what is the bottom line?

EMV cards are undoubtedly a long-awaited, major advancement in bank fraud prevention, though not a permanent, perfect solution. Furthermore, they provide no mechanism to combat online bank fraud from sophisticated attackers. For those who don’t have one yet; or even don’t now to operate the current card worry not. The traditional card swiping utilizing the magnetic stripe will play along for the next couple of years. You should, however, be warned that your transactions won’t leverage this protection if you stick to the former.