In 2015, the American retail and credit card industries started implementing cards with embedded microchips, often called EMV smart chips. This conversion process is still ongoing, and many American credit card users are just now starting to get used to the new system. Nevertheless, there are still many common questions that arise when trying to understand this new credit card authentication system.
Here are six frequently asked questions about credit cards with EMV chips:
Q. What Is an EMV Chip?
A. EMV stands for Europay, MasterCard and Visa, the three companies behind the creation of a standard microchip that can be embedded into any credit card. Unlike the old magnetic stripe technology, EMV chips encrypt cardholder data enabling much more secure transactions while making it much more difficult for criminals to create counterfeit credit cards.
Q. When Will I Have to Use a Credit Card Equipped with an EMV Chip?
A. There is currently no deadline for credit card users to convert to EMV chip equipped cards. The interesting thing about the industry's migration to chip enabled credit cards and readers is that the obligation is on the merchants to upgrade their equipment as well as on card issuers to supply chip equipped cards to their customers. But once you have been issued a card with a chip, you will have to insert the card into the chip reader, rather than swipe it, any time that you are using a compatible terminal.
Q. Why Does it Take Longer for Transactions to Complete When I Use the Chip?
A. Although EMV chips offer greater security, the transactions do take significantly longer than swiping a magnetic stripe. This is because verifying a purchase using an EMV chip involves two-way communication between the terminal and the card. Thankfully, the transaction speed is expected to increase over time as retailer's terminals and software are optimized and updated.
Q. Do I Need a Chip Card When Traveling Outside the United States?
A. Many other countries in Europe and other parts of the world migrated to EMV chip equipped cards long before the United States did. While our magnetic stripes can still be read most of the time in these countries, there are many unattended kiosks that only accept credit cards that are EMV equipped, such as at train stations, gas stations, and toll booths. Merchants are supposed to provide alternatives that are compatible with magnetic stripes, but these may be in less convenient locations or at customer service desks with long lines. If you are planning on taking a foreign trip and have not been issued a chip equipped card, contact your card issuer and request a EMV equipped replacement card at no additional cost.
Q. Is it Impossible to Hack a Credit Card with a Chip?
A. With enough time and effort, any technology can be compromised by a dedicated individual. Furthermore, stolen cards with EMV chips can still be used to make fraudulent transactions online or over the phone when the chip is not even read. EMV cards do make it much harder for criminals to steal the data from your card electronically and create a working duplicate. And thankfully, the Fair Credit Billing Act of 1974 limits the liability of cardholders whose accounts are breached, and credit card issuers waive these limits by offering zero liability policies.
Q. Can the EMV Chip Be Damaged?
A. These chips are much more durable than magnetic stripes, but they are not indestructible. The chips will stand up to regular use and abuse in your wallet or purse, and are not vulnerable to water damage. The most common issue that cardholders encounter is the chip dislodging from the card. If this happens to you, simply contact your card issuer and ask for a replacement card, just as you would any other time that your card is lost or damaged.