5 Facts You Need to Know About the New Chip Cards

This is a Guest Post from Cherie at Queen of Free

The next time you need a little icebreaker or party game, try this on for size. Ask your friends, family, or dinner party guests what they’ve bought without their knowledge. I’m not talking about online sleep shopping or the items that toddlers sneak into carts. I’m talking about what they’ve purchased due to having a credit card hacked.

My friend Bob laid down plastic for thousands of dollars of Mary Kay makeup in England. My friend Tricia bought a big screen TV. My college buddy Becky attempted to win big in Vegas, betting over a grand at a casino. And me? Due to my propensity for online gaming I purchased $450 worth of World of Warcraft role-playing goodies. I tried to purchase another $450 but my card shut down.

Of course, none of us actually bought any of these things! And all of us carry a significant grudge for the thieves who hacked our accounts, dispersing worry, hassle, and feelings of violation along with their spurious purchases.

Shopping with plastic brings with it risk. Each time you make a purchase online, swipe, or now insert your card into a payment kiosk, you could be hacked. In recent years, major breaches invade even the most notable retailers leaving consumers to clean up the mess. Accounts are closed and new cards need to be issued. You may even have a day or two without access to your own money.

It’s for this very reason, many banks and credit card companies recently rolled out the EMV chips on their cards. If you haven’t been issued one yet more than likely yours will arrive before the end of 2016.

But a simple switch has confused consumers like me, you may be perplexed every time you check out. Do I swipe? Do I insert? Do I hit the green button? Do I have to use my PIN? Do I still have the credit card company’s protection if the purchase is processed as debit? Currently, it seems like every retailer has a different procedure. Here’s everything you need to to know about EMVs.

What Does EMV Even Stand For?

I’m going to give you personal finance gold star stickers if you already knew the meaning of the EMV abbreviation. I had been using the term for a few weeks before I realized that it stood for Europay Mastercard Visa. The chip style of card has existed in Europe for nearly two decades.

Why EMV?

So what’s the purpose of a chip style card? Traditional cards transmit data via a magnetic stripe on the back of your card that you swipe through a card reader. All of the data for that card is shared via a single transaction. Chip cards create a unique code for every single use, instead of sharing all of your data with a retailer who then could be hacked like Target was back in 2013. Data stolen from magnetic stripe cards can be easily replicated, allowing thieves to hijack your card and use it for their evil purchases of makeup or TVs or online gaming. But since EMVs create a different data set for every purchase, a layer of protection is added to your account. The goal of chip reader technology is to reduce fraud and safeguard consumers. While no cards or systems are 100% foolproof, the EMV transactions have already dropped fraud rates by over 30%. That’s good news for those of us who don’t want to “purchase” items we’ll never see or use.

So Does That Mean I Have to Use the Chip Reader For Every Purchase?

Yes, if your debit or credit card has chip technology and the retailer you’re shopping is among those who have added payment kiosks capable of reading it, you do have to opt to pay this way. It may feel cumbersome or time consuming to use your card in this fashion; however, keep in mind just how time consuming tending to fraudulent use of your card really is. A few extra seconds added to your shopping trip could save you hours of frustration in the long run. If the retailer has not yet upgraded its payment systems, the first round of EMVs are also equipped with the traditional magnetic stripe so your transaction can be handled with a swipe instead. It just won’t have the added layer of protection the chip does. Eventually those magnetic strips will be dropped completely from cards.

Do I Have to Or Should I Use My Pin Number?

In the past, personal finance experts recommended opting for the credit transaction even when using a debit card. This practice meant that the credit card company that backed your debit card (most often Mastercard or Visa) would be liable for any charges racked up by would be thieves. An EMV combined with a personalized PIN makes your transaction even more secure. If for some reason your card is still hacked and you use your chip card with a PIN, your bank will be responsible for the spurious charges. Even better, if your card requires a PIN and is physically stolen, it will be almost impossible for a thief to make off with any purchases.

What About Online Shopping?

Unfortunately, shopping with your EMV card online doesn’t offer any more protection. You’ll still manually enter your credit or debit card number to make a purchase, making you vulnerable to online attacks. Be smart when you shop online, always looking for the https at the beginning of the web address and the signature little lock indicating you’re on a secure site.

Wise consumers regularly engage in checking their bank and credit card statements, looking daily for potential specious charges. You should immediately report errors or potential hacks to your bank or credit card company. File the paperwork required and begin the process of obtaining a new card. A few minutes of careful attention and record keeping might prevent hours of frustration and money woes. Your EMV may require a few extra steps in the checkout line but brings greater security and financial protection.

Cherie Lowe is an author, speaker and hope bringer. Her book Slaying the Debt Dragon details her family’s quest to eliminate over $127K in debt in just under four years. As her alter ego the Queen of Free, Cherie provides offbeat money saving tips and debt slaying inspiration on a daily basis.