New computer-chip technology is coming online to help protect you from credit card fraud, but there may be some initial bumps in the road.
The days of swiping credit cards are numbered as new computer-chip technology comes online to help protect you from fraud. While the transition to “dipping” instead of swiping might be a little off-putting at first, the added security should make the switch less painful. Even so, there are a few problems you may encounter with the new cards that go a little beyond getting the hang of how to use them.
What is an EMV Card?
The new chip cards are called EMV cards. The EMV is short for Europay, MasterCard and Visa. These high-tech cards come equipped with computer chips designed to protect you and your credit while reducing the overall costs associated with fraud. Instead of the familiar magnetic strip on the back, the cards have improved payment security built into the chips to make it more difficult for thieves to counterfeit cards.
The new chips work by producing a unique transaction code for each use. That code cannot be used again. That means if a thief swipes chip information from a point of sale, the information taken wouldn’t allow another purchase because the transaction number would get denied.
Unlike old magnetic strip cards, the new EMVs call for “dipping” to complete a transaction. This means the cards are inserted into a slot to be processed.
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Possible Pitfalls
So, what kind of problems might you run into with new EMV cards? Here are four of the potential pitfalls:
- Limited security at the start – With concerns running high the new technology will pose too much of a learning curve if it’s fully implemented all at once, American financial institutions aren’t requiring PINs at first. That means chip cards will only require a dip and a signature for the time being. Since only a signature is needed, thieves that manage to steal credit cards will be able to use them by forging a signature.
- Online fraud might grow – Since online transactions won’t require the chip to be read, some analysts fear online fraud could rise. All a thief would need to make phony buys online is a card number, the three-digit security code on the back and the expiration date. Some analysts fear as cards become more difficult to copy and skim, thieves will turn to online fraud to make their ill-gotten gains.
- Purchases may take longer – Remember that whole dipping process? Well, it’s going to take longer for the card to actually read than a magnetic swipe does right now. This inconvenience adds about 20 seconds or so to the purchase process, but in a long line those 20 seconds can add up fast.
- The cards may not work outside the country – While chip technology has been introduced in many overseas locations, so has PIN technology. Since this step isn’t being taken by American financial institutions right away, some shoppers may run into trouble when they try to buy items out of the country. It seems some chip credit card machines in other countries cannot accept signatures and must have a PIN.
While the EMV rollout is likely to have its ups and downs, the growing pains may very well be worth it if the technology is successful at curbing fraud. An estimated $16 billion was stolen from 12.7 million identity fraud victims in 2014 alone, according to Javelin Strategy & Research.
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