By October 2015, most Visa, MasterCard and American Express credit cards will finally be using chip (EMV) security. That’s almost ten years after adoption in the United Kingdom.
After October, U.S. banks not issuing chip cards—and merchants not accepting them—are liable for any incurred fraudulent charges. Already adopted in many foreign countries, chip technology makes it harder to counterfeit cards, especially when paired with a PIN.
That’s why most countries use chip-and-pin cards, so buyers swipe their card and enter a PIN, Personal Identification Number. In contrast, most U.S. issuers will use chip-and-signature cards, which means you still sign for the transaction. They will eventually move to chip-and-pin cards.
How can you tell if your current card is EMV (that stands for Europay, MasterCard and Visa)? Look for a small silver chip and four blue lines on the front. That means the card is NFC—Near Field Communication—capable, and it will send a cryptogram verifying legitimacy when the card is within two inches of an NFC terminal.
The card’s chip creates a unique, one-time transaction code every time the card is used for payment. With the old magnetic-strip cards, the data stayed the same, making it easy to replicate and perfect for counterfeiters. While EMV cards won’t prevent data breaches, it does stop a counterfeiter from using the data again.
Another added security feature? Bank issuers are comparing the cardholder’s mobile phone location to the location of where the credit card is being used. There is concern the card could be stolen if they don’t match.
To learn more about the new chip technology, go here.