What’s that tiny little metallic chip on my new credit or new debit card?
While Americans may not be sure what it is or does, most of the rest of the world does.
The chip is there to make sure your card transactions have a much higher level of security. The days of just swipping and signing for a purchase will slowly fade away in the USA, replaced with inserting and using PINs (Chip & PIN) for transactions.
Cards with chip technology, which are also referred to as EMV (Europay, MasterCard, Visa) cards, are embedded with a microprocessor chip that encrypts transaction information. Each time the chip card is used, the transaction data changes, making it more difficult to copy or counterfeit the card.
Many countries outside the U.S. have already adopted EMV chip technology and it is expected to become the security standard for card payments in the U.S. as merchants begin adding chip-enabled terminals over the next year.
One out of two U.S. payment cards will be EMV cards by the end of 2015. The implementation is being driven the really big banks like BofA, Chase, Capital One and Citi. By the end of next year nine top U.S payment card issuers forecast they will have issued more than 575 million chip-enabled payment cards.
No Worries — At merchant locations accepting chip transactions, customers will insert the card into the chip-enabled terminal and enter the PIN or signature. The cards include the traditional magnetic stripe so customers will be able to swipe their cards just as they do today if the merchant has not converted to the new technology. The new cards also work at ATMs just as they did before.