Credit card chips are effective but threats remain
Over the past few years, chip-based credit cards have become almost universally issued in the U.S., so if you’re reading this and have a credit or debit card, there’s a good chance that it has a chip in it.
Technically, these credit cards with chips are known as EMV cards. This originally stood for “Europay, Mastercard and Visa,” which were the companies that developed the standard for the technology.
In a nutshell, EMV chips have a small microprocessor that generates a one-time code for every transaction. In other words, instead of a magnetic stripe encoded with your credit card number, expiration date and other personal information, an EMV card never sends the same information twice.
The idea is that if a hacker obtains payment information from an EMV card, it will be information that was unique to a past transaction, and therefore would be of no use for future theft.
Is your credit card chip safe?
The short answer is yes, but only when it comes to one specific category of credit card theft. Evidence has shown a significant decline in credit card fraud in countries where EMV card technology has been implemented on a wide scale.
Having said that, the reality is a bit more complex. While EMV chips have cut down on overall credit card fraud, that doesn’t mean they’re 100% effective.
With that in mind, here’s a rundown of the major benefit of chip credit cards, as well as some of the shortcomings of the technology.
❚ Your card is more difficult to replicate. One common form of credit card theft throughout the past couple decades involves a thief essentially cloning your credit card. They obtain your credit card number and other information through a data breach, via a skimming device, or through some other means and encode the information on the magnetic stripe of another card. They then could use the cloned card to pay for purchases, which then would be billed to your account.
Now, it’s not impossible to obtain your personal information from an EMV credit card, but it’s much more difficult. In a data breach, for example, credit card information obtained from EMV cards would be of no use to a criminal. Cloning an EMV credit card would require extremely sophisticated methods and expensive equipment and generally is impractical to do.
Meanwhile, a card skimmer can be made with basic materials and at a bare minimum of expense.
❚ Scanning devices still can steal your credit card data. It also is important to realize that thieves can steal your credit card’s data even if your card doesn’t leave your pocket if your credit cards are RFID (contactless-payment) enabled. There are devices that allow thieves to steal your credit card information through the air, even if your credit card is in your wallet.
Some thieves can even do this with their smartphones, not requiring a specialized device.
❚ Having a chip does nothing to prevent your physical card from being stolen. The fact that there is a chip in your credit card doesn’t prevent a thief from stealing your card and using it to make purchases. EMV transactions don’t require a PIN, so if a criminal gets their hands on your card, they could make purchases with your card by simply inserting your chip and signing your name.
The bottom line
How safe are credit card chips? They are certainly safer than magnetic stripe technology, but there still are several ways thieves could potentially commit credit card fraud. The point is that just because you have a wallet full of chip-based credit cards doesn’t mean you shouldn’t take additional steps to protect yourself.
True data security means being proactive about keeping your information safe and detecting when your credit card data may have been compromised.