In fight against fraud, chip trumps stripe
What is it about the microchip that makes credit and debit cards so much more secure than those with the magnetic stripe? It’s in the numbers. Magnetic stripes contain information that doesn’t change, such as your account number and card expiration date. That makes it relatively easy for a thief to use a cheap machine to scan and store the information on those cards. And whoever gains access to those numbers gains all the information needed to create counterfeits or to make purchases online.
The chip card technology, known in the industry as EMV, doesn’t use static numbers. It relies on a dynamic system — ever-changing numbers — to verify and authorize transactions.
The technology is like a moving target for criminals. A unique number, or token, is generated with every transaction. Actual credit card information is never stored.
If a data breach occurs, the token is useless to hackers, said Doug Johnson of the American Bankers Assn., the trade group for the banking industry.
Adding to the security effort is a requirement that customers either sign the transaction or use a personal identification number to complete a purchase. The chip-and-PIN method is similar to the way debit cards typically work.
EMV cards won’t prevent data breaches, experts said, but they should make it much harder for criminals to profit from what they steal.
The kind of dynamic system the cards use is also the basis for near-field communication technology, which is used in mobile payment systems such as Apple Pay, Google Wallet and Android Pay.
“This is a wholesale shift in the way we’re transacting business and the way we’re protecting the ecosystem,” said Seth Ruden, senior fraud consultant for the Americas at ACI Worldwide, a payment systems company. Shoppers shouldn’t have much of a problem using the new cards. Most customers at a Home Depot store in Burbank, which already started accepting chip-enabled cards, didn’t have an issue using them.
Jay Harik, 55, said the process could be a little smoother, but it will just take a little time.
“Once you get used to it, it’s like anything else,” he said.
Contractor Raul Alvarez, 38, said he didn’t mind the slightly longer time it took to process transactions with his chip-enabled card.
“It’s better, safer,” he said. “It doesn’t really matter that it takes a couple seconds more.”