Do the New Credit Card Chips Really Work?

As I’m sure you've noticed, the way our credit cards are processed has changed due to the embedded “chips” on them. Instead of swiping our cards at check out, we’re now asked to insert the bottom of the cards into a “chip reader” for payment.

 Lots of jokes have been made about the new system—mainly that it takes a really long time and that it’s a bit confusing because not all retailers have it. Standing in line for coffee could now take a few extra minutes and you’ll often see people swipe when they’re supposed to insert the card and vice versa, causing awkward frustration. 

The chip is fairly new technology for the U.S, although it’s been the global standard for every major market for decades. The embedded component, technically called EMV—which stands for Europay, MasterCard and Visa—uses a computer chip to authenticate chip-card transactions. The chip encrypts bank information making them more secure than the old magnetic stripe cards. 

The U.S. has transitioned over to chip cards in an effort to curb credit card fraud, a pretty serious issue. The recent high-profile security breaches at some of the country’s largest retailers have propelled the switch—the magnetic stripe cards use outdated technology that’s easier for thieves and fraudulent businesses to counterfeit. 

Here’s how they work: an EMV credit card chip is a super-small computer that’s extremely hard to counterfeit. When the data is transmitted during a card transaction, it’s encrypted which means even if the information is intercepted, there’s nothing criminals can do with it. 

The Reality

 So do the chips really work? They do—for the most part. Like most things, the system is still a bit flawed. But they have been statistically proven to greatly reduce credit card fraud in Europe.

 And that’s all great. But don’t relax too much, your credit is still precious and vulnerable. The chip might help cut to fraud on face-to-face card transactions, but card thieves still have plenty of ways to rip you off. Using your card at an ATM or gas station have become increasingly dangerous since the chip reader standard has come into play. Then there are the crowd hackers, these thieves are able to electronically pickpocket through credit card scanners and make illegal purchases with your private information. Consider the SignalVault Credit & Debit card protector as a solution to this high-tech problem.

 In addition, many retailers may have the chip system but ask customers not to use it—so far there’s not much rhyme or reason to the transition, which only makes consumers weary. Continue to monitor your credit activity and be patient with the chip…it’s protecting your cards, for now anyway.