Chips Not Strips Becoming Standard for Credit Cards

Posted by in Retail


Breaking free of the magnetic strip technology developed in the 1960s and 70s that is still in use today, merchants and financial institutions are switching the standard to the more secure microchipped cards frequently used in Europe and other destinations abroad. Ezine Articles explains, EMV is an acronym for EuroPay, MasterCard and Visa and it is a standard for inter-processing of IC or integrated credit cards also called PIN and Chip cards.

 

Americans tend to take their time and watch how trends work in Europe before implementing them in the United States. Bill McCracken, CEO of Synergistics Research Corp., an Atlanta-based marketing research firm for the financial services industry speculates to Bankrate.com, "The U.S. is behind for a very simple reason: Consumers have not been asking for chip cards. They have not understood the benefits of a chip card over a mag stripe. So why switch?"

 

It’s basically the theory - if it ain’t broke don’t fix it. However with easier access to counterfeit processing tools like skimmers and an ever increasing fraud rate, people are beginning to realize maybe the current system is not all it's cracked up to be. The big difference in the two ways to process payments is that magnetic strips store static information which thieves can lift and apply to a bogus card before going on a shopping spree. Cards with chips carry encrypted information that creates a unique signature for each transaction. Even if the phone line or internet connection is tapped the data thief will only be able to access useless scrambled data. However, the security features for online and on the phone transactions where the card is not present is pretty much the same.

 

Eric Lindeen, marketing director for Zoot Enterprises, a Bozeman, Mont., firm that provides credit decision and loan origination solutions to financial institutions offers some insight on the switch, "If we are going to have a massive infusion to replace the infrastructure," he says, "card-not-present fraud needs to be addressed early in the process, so we don't have a blind spot where fraudsters have a wide open field."

 

Most of America’s major financial institutions and credit card companies have agreed EMV cards are the way to go and intend to implement them as a standard scheduled to be in place by April 2013. Mobile Payments Today reports, Randy Vanderhoof, executive director of the Smart Card Alliance recently said, "Now that all of the major payment brands have announced their plans and milestones, we are anticipating fairly rapid deployment of EMV in the U.S., harmonized with contactless and NFC payments acceptance. Through this white paper containing all of the latest information and guidance, the Payments Council is providing guidance about the roadmap for EMV migration to make this important shift in the United States as seamless and successful as possible."

 

As of June 2012, Visa, MasterCard, Discover and American Express are all on board to make the switch to EMV cards in the spring. More and more companies are opting to implement the standard as the deadline draws closer. In the meantime, merchants preparing to make the switch have multiple processing options and can run both kinds of payments. Currently, most smart cards are dual-functioning and feature the microprocessor chip along with the traditional magnetic stripe for use inside and outside of the U.S.

 

Companies already using EMV cards include:

 

  •  U.S. Bank's FlexPerks Travel Rewards Visa credit card.
  • Citi's Corporate Chip and PIN credit card.
  • Chase's J.P. Morgan Select Visa Signature credit card.
  • Chase's J.P. Morgan Palladium credit card.
  • Wells Fargo's Visa Smart Card (credit card pilot program).
  • North Carolina-based State Employees' Credit Union EMV debit cards.
  • The United Nations Federal Credit Union chip and PIN credit cards.

 

Thieves will always find a way to swipe what they want but no one needs to make it easy for them. These days, information is more valuable than almost anything else so it high on the list of what thieves want so anything that will protect private financial data from fiends is a good idea. Changing up technology and the process involved of passing information more often than every 4 or 5 decades will give power to the merchants and keep cyber criminals on their toes.

 

Image courtesy of David Castillo at FreeDigitalPhotos

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  • Amy C
    Amy C
    I think these cards are getting to the point where they need to start incorporating a means of catching these thieves via tracking software. EMV is definitely the way to go though. The less these cards get stolen, the less credit card companies are going to suffer financial losses.
  • Heather Fairchild
    Heather Fairchild
    From what I've read, the card companies and not the merchants will be supplying the updated readers as they transition from strips to chips.
  • Shivam
    Shivam
    Well, one of the best ideas I ever heard is to put them in some water and freeze them in the frzeeer.  That way, they don't fit in your wallet, so you can't take them shopping.  If there is a TRUE emergency (like your car breaks down and you have to fix it so you can get to work   for example) you can melt the ice and use your card.  It just makes it so it isn't so handy for all those impulse purchases and I have known several people who have managed to pay off their credit cards this way.As far as needing the information to cancel them, when you call in, they pretty much just need to be able to ask you identifying questions in order to make sure they are cancelling for the right person.If you are really serious about it and you don't want these cards anymore, but just need to pay them off, then you should call up the companies and ask them if you can just cancel your account so that it is disabled and you can't use it anymore   you just want to make the payments and pay it off.   You might be able to make some kind of arrangements that way.Also, if you have more than one and they are at different interest rates, the best way to pay them off is to make the minimum payment on all of the ones except the highest interest rate one.  Then choose a certain amount that you will pay on that one each month that is more than the minimum.  Then when it is paid off, use that same amount of money PLUS the amount you have been paying on the second one to continue to pay off the second one and so on and so on until they are all paid off.Good luck.  It is a good thing to rid yourself of credit card debt.  It can really get you into a mess that is hard to get out of.  You will feel so great when you get it all paid off   just don't go out and celebrate by charging something again! lol
  • Mary P
    Mary P
    Great stuff, keep up the good work!
  • Laszlo M
    Laszlo M
    It's about time. The chip technology needs to be expanded. Times change, we went from being mugged for our cash, to cards being compromised. The chip will obviously eventually become outdated, but the magnetic strip already is. The biggest challenge will be who pays for the "support tools", readers in the retailers, etc.
  • Treva H
    Treva H
    I think it sounds too much like "big brother"!
  • Lyle S
    Lyle S
    This is just the start. The next thing will be to put the CHIP in your hand, so THEY can make this a CASHLESS world. Its just what the Bible says in...REvelation 13,16-18. Read this,it makes sense to me!
  • Patricia W
    Patricia W
    Thank you for update
  • Marilyn B
    Marilyn B
    This looks like a good anti-fraud plan. My concern is will merchants need to buy new scanning devices. Will gas pumps be able to accept both types of cards in the transition period?  The convenience to both consumer and merchant must be considered.
  • warren t
    warren t
    it is too much like the 666 chip they want us to have imbedded in our skin!  we don't want anything to do with chips! the magnetic strips is bad enough!!!
  • Rodney H
    Rodney H
    I think this is a signed that the world end is near. The next thing is to try and get people chip even though it is going on now. For those that do not know the bible they think it is ok., but for those who know they see the end coming.Things like this should stay the same or at a very minimum.
  • Carl G
    Carl G
    The old method is SAFER which in this day and time is BEST.Sincerely

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