How Safe Are Credit Cards with Chips?

Payments started with the barter system a long time ago. People exchanged goods or services for other goods or services. Eventually legal tender took over and money, in many forms—from tea bricks to cow to seashells—become the payment method of choice. Then virtual money came on the scene, including credit cards. And today’s credit cards, have chips. Chips, Not to be confused with cow chips from cattle as money are known as EVM or Europay, MasterCard and Visa. EVM is a newer technology intended to protect users and lower the cost of fraud. But, just how safe are credit cards with chips?

The History of Credit Cards

In 1958, Bank of America successfully launched its first credit card, which later became known as the first successful modern credit card. These credit cards were supposed to be a replacement for the cash people carrier around.

Since 1958, credit cards have evolved. And one of the most recent evolutions happened in the U.S. about a year with the addition of a chip or EMV technology on credit cards. Chips replace the previous magnetic strips used on card. A magnetic strip was a black band on the top back of a credit card that relayed information about the payee, such as account number and enabled a merchant to process the payment. With the demise of mag-stripes, that information is passed through the chip.

It’s believed that cards with chips provide a layer of security that wasn’t provided by mag-stripe cards. But, just how secure are these cards and are they right for you?

Magnetic Stripe Technology

The technology of mag-stripe cards dates back 50 years and is similar to the technology used for cassette tapes. Data is loaded onto the mag stripe by the issuer. The stripe is stable and rarely degrades with time.

Whenever you make a payment with a mag-stripe card, the information loaded in the stripe is read over and over again. The down-side is that consistent data is easily stolen by thieves and hackers, because the magnetic field decodes the information and your bank information is then sent.

Thieves can use card skimmers at ATMs and other locations where you pay with your debit and credit card to steal your information. Stopping a thief from using your card information requires that you cancel your old card and get a new one loaded with new account information. But with the same technology, the new card is just as vulnerable as the old one.

EMV Chip Technology: Beneath the Hype

With the newer EMV credit card and debit card chips, the information on the card isn’t static. It’s always changing. It’s consistently decrypted, changed, and re-encrypted, which makes it harder for thieves to steal it. The chip has a mini microprocessor within it that includes a one-time code for every transaction. With a unique code for each transaction, a hacker can’t use the information, because that information was specific to a past transaction.

So, when shopping online or making payment through a physical payment point, the chip on your card sends a signal to the merchant and decrypts the language. Your payment information is then obtained using EMV authentication methods.

The chip also helps ensure that the transaction and the cardholder are verifiable. With mag-stripe cards, this is done by inputting your PIN and your card’s CVV2 or security code.

In essence, your new card contains the same information your old mag-stripe card had, but the chip offers better security as it constantly generates new encrypted information, providing an extra layer of protection that mag-stripe technology couldn’t offer.

So the answer to “how safe are credit cards with chips,” is that they are safer than older card technologies.

Regardless of the added security with EMV chips, identity thieves will always attempt to steal your information in a bid to gain access to your money. So, it’s still important to take steps to protect your finances, pay for goods safely and avoid getting robbed.

Here Are a Few Ways to Keep Your Chip Credit Card Safe

1. Protect your numbers

Never tell your credit card number or PIN to anyone. With any of these numbers, it’s easier for a theif to gain access to your account and your money. If possible, sign for transactions instead of using your PIN. This way if a false transaction happens, the blame rests on either the bank or the merchant. And never send your account number or PIN in an email, text message or social media.

2. Keep track of your bank statements

Banks are diligent in stopping fraud and preventing fraudulent activity before it happens. Several banks notify customers of an attempted unauthorized use of their debit card at suspicious locations, while other banks flag suspicious transfers and call customers immediately.

Thanks to the extra security made possible with EMV technology cards, it’s not as easy for thieves to steal information. However, it’s still important to review your bank statements regularly in order to spot suspicious transactions. If you find any of these, report the discrepancies to your bank immediately.

3. Choose alternative payment methods

A great way to ensure the safety of your information is to give preference to retailers and vendors using mobile payment technology. Doing this significantly reduces the risk of thieves stealing your information. You can also add your debit and credit cards to your phone, use mobile-friendly payment terminals to ensure your shopping experience is secure. You might also consider investing in identity theft protection.

4. Keep an eye on your credit score

Watching your credit score—not obsessively—but judiciously, can help alert you to changes in your credit, which can indicate that your account information or identity has been compromised or that you’ve had fraudulent charges made. On Credit.com, you can sign up for free access to your Experian credit score. On Credit.com, your score is updated every two weeks. And you get access to a free credit report card so you can see what steps you want to consider to keep your credit good or maybe make it better.