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What You Should Know About EMV Chip Cards

Beginning in October 2015, vendors across America were required to have card readers that could process transactions paid with EMV cards. These new chip cards are supposed to help prevent consumers from having their credit card numbers stolen by hackers and thieves. If you don’t understand how these cards make shopping safer, read on to get answers to your burning questions.

Find out now: Which credit card is best for me?

What Does EMV Stand for?

EMV stands for Europay, MasterCard and Visa, the three companies who developed the credit card technology that’s now being used around the world. The U.S. is among the most recent countries to adopt the EMV standard. This shift largely comes in response to multiple hacks and incidents that have put the personal information of millions in harms way.

How Do EMV Chip Cards Work?

What You Should Know About EMV Chip Cards

Credit and debit cards with EMV chips still feature a magnetic strip, but the chip is responsible for encrypting your data any time you use it at a card reader that is compatible with EMV cards. While the new chip-enabled credit cards were pushed out fairly rapidly to meet the October 2015 deadline, it could take much longer for chip-enabled debit cards to flood the market. That’s because, unlike credit cards, debit cards must be made so that the transactions using them can be processed in more than one way.

Wondering how you can use your EMV cards when you’re shopping? When you head to the nearest register to make a payment, you’ll need to dip your card in the terminal instead of swiping it. To complete the transaction, you’ll either enter a pin number or provide a signature. Chip cards that come with pin numbers are actually more secure since signatures can be forged if the cards fall into the wrong hands.

If you’re someplace where there’s no EMV terminal available, you’ll still be able to use your chip card. But you’ll have to swipe it. You should have no trouble using your EMV card to make a purchase outside the U.S., since many foreign merchants are actually leery of accepting cards without chip technology.

Related Article: 5 Essentials For International Travel With Credit Cards

What Makes EMV Chip Cards Safer?

Stealing information from a credit card that only has a magnetic strip is all too easy these days. Using a simple card reader, criminals can skim your information and duplicate it to make a counterfeit card. Even if you’re providing an electronic signature at the point of purchase, the data on the strip always stays the same, which means thieves can go back and copy it again and again.

With a chip-enabled card, transactions require additional authentication at the point of purchase. Each transaction is assigned a unique code so even if someone was able to get their hands on your account information, they wouldn’t be able to use it to make additional purchases using your card number. While it doesn’t prevent cyber thieves from hacking into a bank or retailer’s computer systems, it does protect your credit card number by making it much harder for them to actually use the information they’ve stolen.

Consumers with EMV chip cards might also be susceptible to fraud if they make a purchase over the phone, since the merchant handling the transaction doesn’t need to see the card for the purchase to go through. Because of these shortfalls, the EMV chip card technology might not be enough to thwart all thieves and hackers.

Related Article: 10 Tips for Secure Online Transactions

Am I Liable for Fraudulent Purchases Made With an EMV Card?

What You Should Know About EMV Chip Cards

The idea is that unauthorized purchases are less likely to occur when using EMV-enabled credit and debit cards. If anything does happen, however, you will not be held liable. Depending on the situation and the terms for that credit card, either your issuing bank or the business where the fraudulent activity occurred will be responsible for the theft.

Since merchants were required to begin complying with EMV standards in October 2015, the blame automatically falls on whoever has put the least amount of effort into integrating the EMV technology.

The Bottom Line

The introduction of EMV chip cards is an example of a strong push to combat and reduce fraud. If you’re still adjusting to the shift in card technology, learning the basics of how these cards work and the benefits that they offer can make the transition a little easier.

Photo credit: ©iStock.com/PhotoInc, ©iStock.com/simonkr, ©iStock.com/STEEX

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She's worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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