You’ve probably starting seeing updated debit and credit cards that include a tiny, metallic microchip embedded in the card front. If you haven’t received yours from your card issuers yet, you can expect by the end of the year. This is the beginning of the long-awaited switchover to so-called “chip and PIN” cards (also called a EMV chip—which stands for Europay, MasterCard and Visa) in the U.S., says the Federal Deposit Insurance Corporation (FDIC). This new card technology is intended to help curtail card fraud.
Here’s what you need to know about the new cards:
Microchip technology has been used in European credit/debit cards for many years, says credit card expert Gerri Detweiler, head of market education for Nav (formerly Creditera), a credit management company for business owners. According to Detweiler, the microchips are encrypted in such a way that they create a unique code for each transaction, making it nearly impossible for hackers to steal authentication numbers from your card. “They’re much more fraud-proof than magnetic strips on cards, which can be duplicated fairly easily,” she explains.
When you use your card with businesses that have chip-enabled technology in their payment systems, you’ll dip the chip-end of your card into the front of the reader and leave it there until your transaction is finished, explains Detweiler. “Processing may take a little longer than what you’re used to, and that’s perfectly normal,” she says. At other payment machines, you may only need to wave your card in front of the terminal or gently tap the card against the reader, according to the FDIC.
A common way thieves gain access to your bank or credit account is to steal your card or secretly swipe it into a reader when they remove your card from, for example, your restaurant table, explains Detweiler. Thieves then “clone” your card—make a copy—and use it wherever they like, according to Forbes. However, the new embedded microchips can make your card much harder to clone, says Detweiler. Also, their ability to create one-use transaction codes helps make them safer.
In many parts of Europe, consumers need to enter a personal identification number (PIN) when they use a chip-enabled debit or credit card, explains Detweiler. However, many U.S. retailers allow you to sign for card purchases instead, says Forbes. You may not even be issued a PIN with your new card. “If you’re planning to travel to Europe, ask your financial institution if you can add a PIN to your account so you can easily use your card abroad,” she suggests.
Some retailers still haven’t upgraded their payment systems to accept the new chip cards, notes Detweiler. In those locations, you can still swipe your card using its magnetic strip. By the end of 2017, she says, most retailers should have upgraded to the chip-enabled card readers. “It’s actually to their benefit, because businesses will shoulder more financial responsibility for fraudulent transactions (as opposed to the credit card company or bank being responsible) until they start processing cards using the chips,” she notes.
Yes, it may be tougher for thieves to make physical copies of your card. However, the microchips can’t stop them from using your card number fraudulently over the phone, online, or by mail, says the FDIC. For that very reason, Europe experienced a big increase in online fraud right after chip cards were introduced.
How to protect yourself: “Just as you always did, protect your card carefully, regularly check your debit and credit card statements immediately for transactions that aren’t yours, and contact your card issuer right away if you suspect fraud,” says Detweiler. You’re still likely subject to the same liability rules for fraudulent transactions with chip cards that you were in the past for credit/debit cards (generally $50 or less) according to the nonprofit Consumer Action.
Look for optional “on-off” switches on credit and debit cards, says Detweiler. If you misplace your card or don’t use it regularly, some financial institutions may soon allow you to temporarily “turn off” your card, she explains. It’s similar to freezing your credit, and can be a great way to stop fraud, says Detweiler. “Thieves are always coming up with new ways to hack credit and debit cards, so issuers are trying to be even smarter,” she notes.
Now, you’re caught up on what to expect with your latest card but, don’t forget to remain attentive to help protect yourself against credit card fraud.