The EMV Chip: What’s This Chip Card Thing All About?

For decades the technology that allows us to pay for goods and services using a plastic card has remained basically unchanged. This consists of a card with a magnetic stripe that contains enough information about your credit or debit account to allow transactions to be authorized for payment. Its simplicity, however, is what has made it an easy tool for identity thieves to steal from financial institutions through their customers.

That’s why OECU is in the process of providing our members cards with the EMV chip. Chip card technology will fix much of the problem but not all. Chip cards utilize high level encryption which allows for an extra level of verification prior to authorizing a payment. This means that transactions done in person are harder to get an authorization for when chip card technology is used by the financial institution and the merchant. If the merchant has not yet adopted chip technology, the transaction may still be approved but the financial institution will be reimbursed for all of the fraud. At first, card fraud may not seem to decrease with chip card technology but as more stores adopt the new standard, less fraudulent transactions will be allowed and the identity thieves will have a harder time stealing money.

Online transactions will not benefit from the added security of chip cards. Since there is no way to put your new chip card in your computer, online stores will still have to decide whether to allow a transaction using just the information on the card. Because of this, when suspected breaches occur, your compromised card may still be closed and a replacement card issued even though you had a chip card.

So how do I use this new card?

When you go to a store or ATM, try swiping your card as usual. At first, most merchants will not have switched over completely to the chip card technology even if their card readers have a slot in the front for the new cards. If the transaction authorizes like normal, then you won’t have to do anything special. If the store has completed their chip card upgrades, you may be asked to put the card in the front of the machine usually face up with the chip side in first. Don’t pull the card out until directed by the machine. Members have reported that instead of requesting the customer insert the card, some machines have simply stated that the card was invalid. If this happens, try inserting the card first. If it still doesn’t work, call the number on the back of the card to find out why.

That’s it! Not a major change to the way you conduct business. But a major step forward in thwarting the efforts of identity thieves.

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