Chip credit cards, also known as EMV (Europay, Mastercard and Visa) cards, more securely store and transmit data using a microprocessor inside the card, as an alternative to using a magnetic strip. The EMV cards encrypt the data when making transactions.
Typically, you still have the option to swipe your card at checkout, as well as using the chip by inserting (or “dipping”) your card into the payment terminal’s chip reader or tapping to pay. The exact method you use to checkout may not seem particularly pressing, but using the chip on your credit cards can help provide better protection against fraud.
Let's look at how EMV chips work, how they secure your transactions and a secure alternative option.
What does a chip credit card do?
The chip embedded inside an EMV card creates a unique transaction code every time it's used. This special security feature helps prevent card counterfeiting, making it more difficult for criminals to illegally collect credit card numbers and security codes during transactions.
How does an EMV chip work?
When a consumer dips or taps a chip credit card, the chip transmits credit card payment information to the card issuer without exposing the actual credit card number. That exchange verifies the credit card is authentic. In the U.S., the chip verification process is typically accompanied by a signature requirement, which is another level of authentication.
Is EMV a new credit card technology?
No. Credit card chip technology has been common in the U.S. since 2015. You can trace its roots back even further in other regions, such as Europe, where chip credit cards have been in use since the mid-1990's.
Nowadays, most credit cards now come with an EMV chip, and magnetic strips may be on their way out for new debit and credit cards.
What other payment options do I have if I don't have a credit card chip?
You may still be able to use a credit card with a magnetic strip if you don't have a chip-embedded card, since EMV terminals also accept swipes from cards with magnetic strips. If your credit card issuer has not yet upgraded your card and you want to adapt to newer technology, you may have another option: a digital wallet.
What is a digital wallet?
A digital wallet stores your credit card information in an app on your smartphone. At checkout, you’d use the app to bring up the card you want to use, and then tap your phone on the pad at the register. This way, you may not need to present a physical card.
Whether you use the EMV chip or magnetic strip on your credit card, or a digital wallet, security should be top of mind. Given the wide adoption of EMV technology, it’s easier than ever to take advantage of this added security feature.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
