Financial Advice

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Chip Card 101

Jason Endsley, Senior Manager of Virtual Retail, visits KXAN Studio 512 to talk about chip cards, why, U.S. financial institutions are switching to them, and how they will affect you.

Did you know there is a type of debit and credit chip card technology known as EMV to which U.S. financial institutions are switching? Over time, UFCU will be adopting the chip card technology, and we’d like to provide you with general chip card education and information on what to expect.

What is EMV? What is a Chip Card?

EMV is an acronym that stands for Europay, Mastercard & Visa. It is a global standard for credit and debit cards based on chip card technology.

A chip card is a security-enhanced debit and/or credit card which has an embedded microchip. With traditional magnetic stripe cards, the stripe on the back of the card contains data that does not change. This means the data needed to complete a transaction can be re-used if the card is stolen. The small, metallic square microchip on a chip card is the heart of the difference between these two card types. When a chip card is used, the chip generates a unique transaction code that cannot be used again.

What can I expect when I use my chip card?

Initially, chip cards will continue to feature a magnetic stripe in addition to the embedded microchip. The magnetic stripe will allow you to continue to make card purchases by swiping your card at a sales terminal.

However, if you are visiting a retailer that has an active chip card terminal, be prepared for a new chip card transaction experience. At the register, instead of swiping your card, you will do what is called “card dipping.” Card dipping simply means inserting your chip card into the terminal slot; the terminal retains it for the duration of the transaction and then returns it to you once the transaction is complete. This is different from the typical quick swipe with which you are probably familiar. In fact, don’t forget to take your card from the terminal before you leave!

Are you concerned you won’t know what to do? Don’t be! If you find yourself at a register and you are not sure whether to swipe or dip your chip card, rest assured the terminal or the retail associate will prompt you to take the correct action to complete your transaction.

So why the change and what are the benefits?

The move to EMV technology is for two reasons:

  • to adopt latest card technology standards; and
  • to mitigate counterfeit card fraud.

The biggest benefit of EMV technology is the reduction in card fraud resulting from counterfeit cards. The chip on the card plays an active role in the transaction encryption. Because the chip technology is incredibly difficult to crack, in-person transactions are much more secure.

Chip cards also allow you the convenience of being able to use them for payments on chip compatible terminals anywhere in the world.

Do Chip Cards prevent all fraud?

Although the embedded chip does make fraud more difficult, it will not prevent all fraud.

Chip cards used at chip-enabled terminals encrypt card data, virtually eliminating the ability to grab card data used to counterfeit cards. There is still a possibility for online fraud to occur as the chip is not utilized during online transactions.

Stay tuned!

As we approach the UFCU chip card launch, watch for more information from us.