MoneySmart

Financial tips and money-saving advice from USU Credit Union

EMV Smart Chip

August 6, 2015

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This is the year that EMV chips are going to be significantly integrated into the US wallet.

EMV, named for its original creators, stands for Europay, Mastercard, and Visa. Today, EMVCo members include Mastercard, Visa, JCB, American Express, China UnionPay, and Discover. These microchip cards are different from your average credit card with a magnetic stripe; they utilize, instead, a small computer chip. Also known as “IC credit” cards, these EMV cards will be an important step towards reducing credit card fraud.

How is EMV technology safer?
EMV may be new territory in the United States, but it has been used widely in Europe for about a decade. This new method of charging is significantly safer than the traditional swipe and sign method, and as such, many merchants in Europe are very hesitant to accept payment with traditional credit cards anymore. Your current credit card contains data in its magnetic stripe that is duplicable. It can be copied and used at any point-of-sale terminal, or to obtain cash. Counterfeiters have this down to a science, and fraud in the US has risen significantly in the last decade as other countries have transitioned to EMV cards. With EMV cards becoming customary in the US, instances of fraud are expected to drop significantly.

How does EMV work?
EMV technology works by creating a distinctive transaction code each time you make a purchase. This code cannot be used again, therefore making classic duplication impossible for counterfeiters. This system has significantly reduced fraud in countries where EMV cards are standard, because it makes it nearly impossible for criminals to use stolen data from retail stores.

Instead of swiping your credit card, you will “dip” your card into the terminal. Your card will need to remain inserted in the terminal during the entire transaction so your unique transaction code can be created and communicated. This will take a few seconds longer than simply swiping your card, but the added security benefits will make it worth your patience. You will then sign or enter your PIN for your purchase, as with any regular card transaction.

POS systems will still be enabled with magnetic stripe technology for cards that have not been updated to the new chip system for the next few years. However, if you use your magnetic stripe to swipe your card at a non-EMV compliant terminal, your card has a much greater chance of being compromised.

By October 2015, most retail stores in the United States must have EMV-compatible point-of-sale systems up and running. Credit card distributors will also be required to re-issue credit cards with an EMV microchip. Debit cards may not receive EMV chips until 2016.

When can I expect to see my new chip card?
The upcoming shift to EMV-compatible technology is very exciting. USU Credit Union will be issuing new chip cards during the next couple months; you may have already received your new card. Debit cards may not be issued with EMV until the end of the year or beginning of 2016.

Visit our EMV page for more information.

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