What’s this about new smart cards?
In October of this year, retailers and credit card issuers must adopt EMV technology or become liable for credit card fraud losses. EMV stands for Europay, Mastercard, Visa. The new cards are also called smart cards or chip cards. Between now and October, you’ll probably be issued a new card and see new credit card terminals at retail stores.
So what is EMV technology and what does it do for you? Here are 3 things to know about the new smart credit cards.
1. How it works.
Your old credit card has a magnetic stripe that contains your name, the card number, expiration date and CVV (that 3 digit number on the back of the card). When you swipe the card at a store, the card reader reads the data from the stripe. With the new smart card, your new card will include the magnetic stripe and it will also contain a microchip. New card readers will read the chip and assign a unique transaction number to each purchase made with the card.
2. How it protects you.
With current technology, someone can steal your card information and make a counterfeit card including a magnetic strip that can then be used in any retail store. We’ve all heard the stories about the unscrupulous convenience store clerk that had a device in his pocket that skimmed the data from your credit card that he then used to make a counterfeit card. The smart card will make this skimming card data next to impossible. Without the actual microchip, a purchase can’t be made.
According to recent statistics, fraudulent purchases with counterfeit cards account for 37% of U.S. card fraud. Without the chip, the data in the strip is worthless. With the chip technology, credit cards become much more difficult to counterfeit. The main goal of smart card technology is to drastically reduce or eliminate credit card fraud from counterfeit cards.
3. What it won’t do.
While the smart cards will help keep your credit card from being counterfeited and used in stores, it won’t protect you against any online purchases that use the data on the magnetic strip. As counterfeit card activity declines, we can expect identity thieves to increase their fraudulent online purchases. So while we have less worry about someone making a counterfeit card, we should all be more diligent with our online data and purchases.
Smart cards are an upgrade that will help increase security by eliminating card skimming and cloning which in turn will decrease fraud. But we should remain as diligent as ever with safeguarding our personal information.