Banks start issuing new chip-enabled credit cards
26 September 2015
Banks in the US have started issuing new chip-enabled credit cards. These cards need to be inserted and held in a credit card reader to complete a transaction.
The new cards look very much like the old cards, but they incorporate a small metallic chip on the front. These EMV microchips, as they are called should be seen as mini computers; they hold payment data, which in the old cards was held on the magnetic stripe, and provide a unique code specific to each purchase.
The new cards, though, are not exactly new and have been around for over 20 years and are common in many areas of the world. They provide a higher level of security than magnetic-striped-only cards.
The magnetic strip in the old cards could be easily copied to create fake cards. Thieves mostly get their hands on card's data through data breaches with card skimmers they install in places like ATMs and gas pumps.
Users can lose their data to the cheats when they swipe your card at a compromised machine.
The US was the last major country to transition its cards, while the UK was the first to adopt the new payment system, known as the EMV standard, which is named after the developers Europay, MasterCard and Visa.
In India, chip cards have already been in circulation since 2014.
EMV requires cards be outfitted with a chip that transmits a unique code for each transaction which drastically reduces the ability of thieves to use stolen credit card numbers in stores.
The standard was adopted by the UK in 2006, two years later Australia embraced the technology and Canada did it in 2012.
The US had however, lagged behind in embracing the chip technology and was the last industrialised country to switch to EMV.
According to EMV Co, Western Europe had around a 84 per cent EMV adoption rate as of 2014, while the US adoption rate stood at 7 per cent.
''There was a perception that perhaps a better technology would come along,'' says William Bondar, senior vice president of retail payment at PNC Bank, themarketbusiness.com reported.