Have you gotten an EMV credit card yet?
EMV isn’t a new brand of credit card. It’s a more secure system of payment that uses microchips embedded in credit cards and special payment terminals to protect your information when you’re making a purchase.
Until recently, most credit cards in the U.S. carried only a magnetic stripe on the back. This magnetic stripe contained the information needed to complete a transaction: your name, your credit card account number, the expiration date of your card and your card’s three-digit security number. When you swipe your card at the checkout, a third-party company (called an acquirer) checks your information and let the merchant know whether or not it’s okay to complete the sale.
But magnetic stripe credit cards aren’t very secure. Your information can be accessed pretty easily by thieves equipped with credit card skimmers that read the data embedded in the magnetic strip. With that data, thieves can manufacture counterfeit credit cards to use at brick-and-mortar (physical) stores, or use your information to make purchases online.
Cards that use the EMV technology provide better protection against that kind of theft. You can find out if your card has an embedded microchip by looking at the front. If you see a small gold square with a pattern of lines suggesting electronic circuits, you’ll know you have the most up-to-date technology.
Smart cards process transactions in a dynamic way, with high-level, encrypted communications between the chip in the credit card and the merchant’s payment terminals. With an EMV card, each transaction is made with unique data that can’t be used for later transactions. The encryption in the microchip also makes it almost impossible for thieves to capture your credit card data.
Some cards with the EMV chip (also known as smart cards) are chip-and-signature cards. They require you to sign your name to complete the transaction, just as you do now. Chip-and-PIN cards require you to use a PIN number whenever you use your credit card. Chip-and-Pin is generally considered the most secure technology because it’s harder for people to guess your PIN than it is for them to forge your signature. Some smart cards--considered the least secure--don’t require either a PIN or a signature to complete a transaction.
The standards for EMV cards were developed in Europe by Europay, MasterCard and Visa. (That’s where the EMV comes from.) Although we’re just starting to see this technology use in the United States, credit cards issuers in Europe, Latin America and Asia have been employing it for years. After the adoption of EMV cards, countries like Great Britain saw a dramatic reduction in the fraudulent use of cards at physical stores. Unfortunately, the fraudulent use of cards online--where the technology for EMV cards can’t be used--has increased.
Two years ago the major credit card issuers in the U.S. began urging banks and merchants to adopt EMV-based cards and sales terminals. After October 2015, those who haven’t made the upgrade could face financial penalties if a card is used fraudulently.
But don’t worry if you don’t have a smart credit card yet. At least for now, most terminals equipped for EMV cards will also be able to handle the more traditional magnetic strips cards.