Learning About Chip Cards
What are "Chip" Cards?
Chip cards are like the card you have today but include an embedded microchip. The chip contains information that is encrypted, making it extremely difficult for the card to be copied or counterfeited. Your chip card will also have the usual magnetic stripe on the back so that you can continue using your card while merchants are transitioning to the new "chip capable" terminals.
What are the benefits of "Chip" Technology?
The embedded microchip provides strong transaction security features and other application capabilities that are not possible with traditional magnetic stripe cards. A chip card is extremely difficult to counterfeit.
Why is my card being updated to a "Chip" Card?
Chip technology is already being used in other countries and is now coming to the U.S. Your new chip card provides an extra level of security and is easier to use at International locations.
The nationwide shift to Chip cards has begun.
Chip Technology is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. In the wake of numerous large-scale data breaches and increasing rates of counterfeit card fraud, U.S. card issuers are migrating to this new technology to protect consumers and reduce the costs of fraud. These new and improved cards improve payment security, making it more difficult for fraudsters to successfully counterfeit cards. For merchants and financial institutions, the switch to Chip cards means adding new in-store technology and internal processing systems, and complying with new liability rules. For consumers, it means activating new cards and learning new payment processes. Most of all, it means greater protection against fraud.
1. Why are Chip cards more secure than traditional cards?
It's that small, metallic square you'll see on new cards and on the card in the above picture. That's a computer chip, and it's what sets apart the new generation of cards. The magnetic stripes on traditional credit and debit cards store contain unchanging data. Whoever accesses that data gains the sensitive card and cardholder information necessary to make purchases. That makes traditional cards prime targets for counterfeiters, who convert stolen card data into cash by producing counterfeit cards and using them to make purchases and get money out of ATMs.
If someone copies a mag stripe, they can easily replicate that data over and over again because it doesn't change. Unlike magnetic-stripe cards, every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again. If a hacker stole the chip information from one specific point of sale, typical card duplication would never work because the stolen transaction number created in that instance wouldn't be useable again and the card would just get denied. CHIP technology will not prevent data breaches from occurring, but it will make it much harder for criminals to successfully profit from what they steal. Experts hope it will help significantly reduce fraud in the U.S., which has doubled in the past seven years as criminals have shied away from countries that already have transitioned to CHIP cards. The introduction of dynamic data is what makes CHIP cards so effective at bringing down counterfeit card rates in other countries.
2. How do I use an CHIP card to make a purchase?
Just like magnetic-stripe cards, CHIP cards are processed for payment in two steps: card reading and transaction verification. However, with CHIP cards you no longer have to master a quick, fluid card swipe in the right direction. CHIP cards are read in a different way. Instead of going to a register and swiping your card, you are going to do what is called 'card dipping' instead. This means inserting your card into a terminal slot and waiting for it to process. When an CHIP card is dipped, data flows between the CHIP and the issuing financial institution to verify the card's legitimacy and create the unique transaction data. This process isn't as quick as a magnetic-stripe swipe. It will take a tiny bit longer for that transmission of data to happen. It isn't as quick, but it is much less susceptible to fraud.
3. Will I still have to sign or enter a PIN for my card transaction?
Typically Yes, you will have to do one of those verification methods, probably enter a PIN, but it depends on the verification method tied to your CHIP card, not if your card is debit or credit. Chip cards operate just like the checking-account debit card you have been using for years. Entering a PIN connects the payment terminal to the payment processor for real-time transaction verification and approval. However, some merchants may automatically approve low dollar transactions without a PIN or a Signature.
4. If I want to use my chip-card at a retailer that doesn't support CHIP technology yet, will it work?
Yes. The first round of CHIP cards -- many of which are already in consumers' hands -- will be equipped with both chip and magnetic-stripe functions so consumer spending is not disrupted and merchants can adjust. If you find yourself at a point-of-sale terminal and are not sure whether to dip or swipe your card, have no fear. The terminal will walk you through the process.
5. Do I need to keep my CHIP Card in a Metal Carrier so that people walking by can't steal my card Information?
No, not the ones that BNB will be issuing. There are several types of CHIP cards. The CHIP cards that BNB will be issuing must be placed in the "DIP" reader for any CHIP transactional information to be read from the card. Also, the information stored on the card that might be captured from a merchant breach is only good for that one transaction. Any attempt to use the data over again for additional transactions will be rejected.