7 Things to Know About Chip-Enabled Credit Cards

Blog Post12/03/2015
Identity Protection

Even if you’ve missed the headlines, chances are you’ve had a new credit card show up in the mail as the U.S continues its rollout of the new chip-enabled cards. These upgraded versions, also called EMV (short for Europay, MasterCard and Visa) are meant to help fight fraud and safeguard your accounts.

While these cards have been used abroad for decades, their introduction to this country has been a slow process due to the high cost of installing new card terminals. According to a recent survey by the National Retail Federation, only 47 percent of consumers with a chip card have used it in a chip reader. If you haven’t received a new chip card or if you haven’t used one before, here are a few points to know.

Helps Prevent Fraud for In-Person Transactions

Instead of featuring a magnetic strip, the new cards will include an EMV chip that makes it much harder for criminals to steal information. Each time you use a magnetic strip card, the same data is transmitted to the credit card companies at the time of the sale.

With an EMV card, on the other hand, a new code will be used for each transaction that you make, which makes it hard for criminals to copy your credit card. In a recent TransUnion survey of people who have used the new chip-enabled cards, 59 percent responded they felt more secure shopping with them and only 3 percent felt less secure.

How to Use the New Cards

Instead of swiping your credit card like you have in the past, you will insert your card into a card reader and leave it there for a few seconds. This card reader will read the information on your card and process the transaction.

Most of the world is now using chip-and-PIN cards, which require you to use a PIN for each transaction. Only a few card issuers will offer the more secure PIN and chip cards. For now, the majority will offer chip-and-signature cards, where you still must sign for your purchases.

Fraud Liability Changes

If you notice a fraudulent charge on your account after you start using a chip-enabled card, nothing is going to change. You still call the card issuer like you have always done. What is different about these new credit cards is who will be liable for the fraudulent charge. If the retailer has not made the change to an EMV card reader, they will likely assume liability.

It Won’t Prevent Online Fraud

While chip cards may provide an extra layer of security in person, they’re just as vulnerable as the old cards to online fraud. While this new technology makes it harder to steal physical card numbers, it may cause criminals to focus their efforts online, which happened when they were first used in foreign countries. In addition to checking your card statement regularly, you should always be aware of what’s on your credit reports so that your credit score isn’t damaged by possible fraud.

Not Everyone Has One

If you haven’t received a new chip-enabled credit card, don’t fret. The October 1 deadline was just for retailers so that they would be forced to make the change in-store. You can keep using your regular card. Analysts even predict consumers will still be using their old cards for years to come. In the same TransUnion survey mentioned above, of those who are aware of EMV cards, 33 percent still don’t have any cards with the chip, while 46 percent have some of them and 21 percent have new chips to replace all their old ones.

You Can Still Swipe an EMV Card

For the near future, EMV cards will have both magnetic strips and chips. Because not all retailers have made the change to chip card readers, you will still be able to swipe your chip cards. This is especially true for many gas stations, because they will not need to add EMV readers until 2016.

Some Foreign Retailers Won’t Accept Them

You might have a problem using your new chip-enabled credit card in other countries. For years many European merchants have been reluctant to accept US credit cards because of the liability they would face. Because we will have a less secure chip-and-signature system and not chip-and-PIN, these retailers may remain hesitant to accept our credit cards.

Disclaimer: The information posted to this blog was accurate at the time it was initially published. We do not guarantee the accuracy or completeness of the information provided. The information contained in the TransUnion blog is provided for educational purposes only and does not constitute legal or financial advice. You should consult your own attorney or financial adviser regarding your particular situation. For complete details of any product mentioned, visit transunion.com. This site is governed by the TransUnion Interactive privacy policy located here.