What’s with the Chip? How EMV Chip Technology impacts your credit and debit cards

Thursday, January 7, 2016

You may have been hearing in the news that credit card technology is changing. Members of First Basin have received new debit and credit cards that contain EMV chip technology. EMV stands for “Europay, Mastercard, Visa” and it is the set of standards developed in the industry that enable chip-based payment. It’s the little square hologram on the front of the card, but don’t be fooled by its size. That tiny square packs some mighty power when it comes to fraud protection. The card contains a microchip with a cryptogram that makes non-legitimate transactions very difficult: essentially a deterrent for fraudulent users.

When a card with an EMV chip is used in an EMV reader (as opposed to the magnetic strip that we’re used to), the card produces a single use account number for that transaction. This makes stealing the card number a useless endeavor, because the number generated won’t work for another transaction.

This technology has been around in Europe for a few years, and because of the reduction on fraud, it is finally making traction in the United States as well. Be mindful, though, that chip technology only works when vendors have the device needed to scan them. Just in case they don’t, the new cards will continue to also have a magnetic strip so that they can be used anywhere that takes traditional credit cards. And, phone and online orders will still require utilizing the number printed on the credit or debit card.

However, recent legislation has shifted the fraud liability to the vendor, if a vendor does not have the chip technology. Expect to see merchants racing to implement the smart readers, simply because they don’t want to be left on the hook for fraudulent charges stemming from a transaction at their store.

The bottom line - the chip technology is a good thing. It protects you and the merchants who accept credit cards from the frustration and financial pitfalls that can come with fraudulent charges. So when yours arrives, make sure you activate it right away. If you have any questions, please stop by your nearest First Basin branch and we’ll be happy to help.

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