Rich Crocco

5 Things You Need To Know About Chip-Enabled Credit Cards

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Chip-enabled credit cards, or ‘smart cards’ will be making their official U.S. d├ębut in only six months, on October 1st, 2015. This is the date of the so called ‘liability shift’ where banks and credit card issuers will be shifting the liability created by fraudulent credit card activity from themselves to merchants. Now this shift really only takes place when a merchant fails to upgrade to POS technology capable of processing chip-enabled cards. Nevertheless, this deadline allows for a credible line in the sand where the U.S. is officially following the footsteps of the Europeans in fighting credit card fraud.

With the deadline approaching I thought I would explain five of the major questions on this issue:

1. What benefit comes out of chip-enable cards?

The benefit of using a chip-enabled card (also known as an EMV card for Europay, MasterCard, and Visa) is the increased security that comes from the chip imbedded in the front of the card rather than the traditional mag stripe on the back. What the chip offers is unique coding for each transaction processed with that chip. Information held in the traditional mag stripes of credit cards is static, that is if someone steals that data it can be used to make fraudulent purchases over and over again until the card is turned off. With chip-enabled cards each transaction is unique. Therefore if the information is stolen, when the card is used again the transaction will be declined because the unique code that was stolen cannot be used again. Read more…