Europay, MasterCard and Visa are the brains behind the newly introduced credit card which was introduced in order to curb cases of credit card fraud. The new card is known as EMV, an acronym for three companies that facilitated its formation. While this technology was only recently introduced in the United States, it was introduced in the UK in 2005 and it had an immediate impact because credit card fraud reduced by a whopping 63% and experts are hoping that the same can be replicated in the USA.
How Does the Credit Card EMV Chip Function?
The card uses the chip technology, meaning it has an embedded microchip known as EMV. Unlike old generation cards where the user swipes the card and the machine connects with its magnetic strip, the new chip is different in the sense that the EMV smart chip interacts with the EMV reader, thus encrypting the data in the chip and is able to authenticate it. Thus your credit card info is kept at bay, between the chip and the chip reader. The big difference between the new technology and the previous credit card technology is based on the fact that when you swipe the older generation card into a machine it only reads credit card number and expiration date meaning that the data is not encrypted, thus making it more vulnerable to hackers and fraudsters who can easily copy your card information.
Once the reader encrypts the data in the chip, you can then use your 4-digit PIN to complete your transaction. The card owner will then be prompted by the card reader to remove the card from the slot and a receipt for the transaction will be issued out.
How Does The EMV Chip Technology Affect Retailers and Small Businesses?
Retails shops had until 1st October 2015 to install the new EMV card readers in order to ensure that consumers are protected from credit card fraud. In order to ensure that the new technology is implemented by retailers, any cases of credit card fraud which occur at the retailer`s premises from the 1st of October will be covered by the retailer. Installing the new EMV reader comes at a cost of less than $500, depending on the number of EMV card readers you need, which is cheaper than having to compensate a customer thousands of dollars in case of a fraud.
To ensure a smooth transition into the new technology, gas stations have until 2017 to replace their readers at the pump with the EMV readers.
How Does The New Chip Technology Affect Consumers?
The older generation cards will be phased out gradually through 2016. Banks and other card issuers will be required to comply with the new rule and send the new cards to their customers.
Experts are quick to point out that the new card does not guarantee the user 100% safety, but it still safer compared to the old card. Users will also have to adapt to the EMV card readers because the new rule brings a shift to the old card-swiping habit at retail stores and they will have to embrace dipping the card into the reader. However, the chip still has some limitations such as the fact that it will only prevent a fraudster from stealing your card information while making physical transactions, but it will not protect consumers with online transactions. The EMV technology will only work to its full potential once both parties adopt the technology, meaning that retailers will have to install the EMV machines while consumers will have to acquire the new chip-fitted cards.