5 ways to get smart about chip credit cards
Published: November 25, 2015
This holiday season is the first one in which a large segment of Americans will be carrying upgraded debit and credit cards equipped with EMV chips. The new generation of cards likely will cut down on fraud, but they could make for slower shopping until consumers get comfortable. Here are some facts to know about this transition.1. This isn’t an overnight switch
In this country, banks have been sending new cards to customers throughout the year, though the process is far from complete. The American Bankers Association estimates that 575 million chip cards will have been issued by the end of 2015. But not everyone will have them for another couple of years.2. The cards work a bit differently for consumers
Consumers don’t swipe their cards but, rather, insert or “dip” them into terminals — face up and with the chip facing forward. Then they must wait for a transaction to finish, after all the items have been rung up.
Transactions take a bit longer to process. How much longer won’t be known for a bit longer. “This will be the first holiday season after the transition,” said Rob Nichols, incoming president and CEO of the American Bankers Association. “It will be an instructive holiday season for our industry.”
The bigger issue is remembering to pull your card from the machine when finished. When swiping, you never let go of your card. But this time you might let go, then forget.3. The new cards have little microprocessors in them
One reason EMV cards are more secure is that the information on swiped cards isn’t encrypted. Also, the new cards contain tiny microprocessors that run software that produces a code, or “cryptogram.” This code is sent across the network during a transaction and is required for authorization by the bank computer on the other end. Suspicious transactions can be spotted and stopped. Each code can be used only once. The chips themselves are difficult to copy or counterfeit.4. The new cards carry the same fraud protections — for consumers
On credit cards, card holders by law are on the hook for a maximum $50 in fraudulent charges, but many banks absorb the losses completely. That doesn’t change with the new system. “Customers are fully protected,” Nichols said.5. The new cards won’t eliminate all card-focused fraud
The new cards should cut fraudulent activity on transactions in stores, but that doesn’t erase all fraud issues. EMV cards do make in-store transactions safer, but not those done remotely.
Fraudulent charges still can be made over the phone or Internet by criminals armed with stolen account numbers and other information. Thus, consumers still need to safeguard their personal information and steer clear of suspicious websites.