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Do EMV Chips Reduce Credit Card Fraud?

EMV Credit Card Chips

EMV Chips and Credit Card Fraud

You trust your bank, online merchants and major retailers to keep your financial information safe. Unfortunately, that isn’t always possible.

From skimming to hacking, inventive criminals are always finding new ways to steal your credit card and debit card information.

In an effort to protect consumers and reduce losses, Mastercard and Visa teamed up with Europay to bring you the EMV chip: a new technology aimed at thwarting the theft of your credit card information.

Emv Chip ReaderEMV Chips vs. Magnetic Stripes: How They Work

An EMV chip is a small microchip located on the front of your credit card. When you made credit card purchases in the past, the vendor swiped your credit card through a card reader.

The card reader picked up and stored the information present within the magnetic stripe on the back of your card.

EMV chips serve the same purpose. Like magnetic stripes, they provide the merchant with the information necessary to process your payment.

Unlike magnetic stripes, EMV chips are uniquely encrypted.

Each transaction produces an encryption code that protects your personal information as it moves from your credit card to the vendor’s computer.

The vendor needs a special type of card reader to process EMV chips.

Emv Cards Reduce FraudDo EMV Chips Reduce Credit Card Fraud?

Merchants that accept chipped cards pose a lower risk to their customers than those who only use magnetic stripe readers.

This is because, in addition to being encrypted, EMV cards generate a unique identification number for each transaction.

If they have access to your credit card information, thieves can create a counterfeit credit card–complete with a functional magnetic stripe–and use it to charge purchases to your account.

The encryption and unique transaction numbers EMV chips generate, however, make it nearly impossible for would-be thieves to successfully simulate a chipped credit card.

The degree of difficulty thieves face in duplicating chipped credit cards makes these cards considerably safer than their magnetic counterparts.

Although it’s still possible for dedicated thieves to steal your credit card information–usually by installing software into a merchant’s computer that “reads” EMV chip transactions–it’s a lot less likely.

Credit Card Info at RiskWhy Your Credit and Debit Card Information Is Still at Risk

EMV chips may be new technology to Americans, but Europeans have enjoyed the added protection these chips provide for over a decade.

Because chipped credit cards are the standard overseas, most merchants that accept credit cards are equipped with the special terminals necessary to read EMV chips.

Many European merchants are unable or unwilling to accept credit cards that only have a magnetic stripe.

Because so few credit card transactions in Europe take place using a magnetic stripe to transmit information rather than an encrypted chip, credit card fraud is much less common than in the U.S.

Unfortunately, your chipped credit card can only protect your information if you use the chip to make purchases.

Few merchants in the U.S. have the special payment terminals necessary to pull data from microchips.

This means that most vendors will still access your credit card data using the card’s magnetic stripe–leaving you at greater risk of having your credit or debit card information stolen.

Online Credit Card Fraud

EMV Chips May Lead to a Higher Risk of Online Credit Card Fraud 

Criminals who glean a portion of their income from credit card fraud aren’t simply going to give up and search for honest work once chipped credit cards become the norm.

Fraudsters will simply find different ways to access and use stolen credit card data.

Online purchases don’t require a magnetic stripe or an EMV chip. As a result, the internet is the ideal place for thieves to continue their fraudulent credit card activity–and empirical data suggests they’ll do just that.

As European countries switched to the new EMV chip technology, for example, each reported a noticeable increase in online fraud.

The U.K. alone experienced a 79 percent increase in fraudulent internet purchases after EMV chips were introduced.

As magnetic stripes are phased out, your risk of falling victim to credit card fraud will gradually decrease.

Unfortunately, dedicated criminals will find a way around even the most stringent technological safeguards.

EMV chips may provide you with added protection against theft, but they are no substitute for caution.

Regular online monitoring of your credit card accounts and bank accounts ensures that you’ll catch any suspicious activity early. This helps minimize the damage if your information is stolen.

Regardless of whether you use a credit card equipped with an EMV chip or stick to the magnetic stripe variety, vigilance will always be your best weapon against credit card fraud.

Summary
Article Name
Do EMV Chips Reduce Credit Card Fraud?
Description
You trust your bank, online merchants and major retailers to keep your financial information safe. Unfortunately, that isn’t always possible.
Author
Publisher Name
No Identity Theft
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  • Andrea Robinson

    I heard that the new chips might not be foolproof and that credit card fraud is still gonna happen, and now I know why. This is really informative. There’s been so much hoopla about the new cards that you’d think that shopping anywhere – even online – is virtually carefree. Now I know the truth, and being forewarned is being forearmed. 🙂

  • Beth Anne

    No matter what kind of safety and security feature is put into place, there will always be that one person who has to crack the code. That’s why we will always need these companies to protect us. It’s just a problem that will never completely go away. We can make it harder for them. I can’t wait until my new cars comes in the mail. I feel like I’m the only one that doesn’t have a chip.

  • Damon

    Well, it would only make sense that even though you have new technology to “keep us safe”, that there is someone out there trying to crack the code. I would not really think it makes me any more safe, however, I am also not going to let my guard down. I still follow the same protocol when it comes to shopping online or giving away my personal information for any reason.

  • Kelly Johnson

    So glad that i found this article. There has been so much hoopla around the chip cards yet little talk about how online/internet fraud may increase because of this technology. Most people will need more protection if scam artists turn their attention to gaining and stealing online. It’s great that the chip will provide an extra layer of protection but we also need to be more diligent about keeping our info safe online. I’ll be sharing this info with everyone I know. Thanks, No Identity Theft!

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