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Chip technology makes credit card theft more difficult. EMV chips create a unique key each time you use your card.
Cynthia Paez Bowman
Cynthia Paez Bowman is a finance, real estate and international business journalist. Besides Bankrate.com, her work has been featured in Business Jet Traveler, MSN, CheatSheet.com, Freshome.com and SimpleDollar.com. She owns and operates a small digital marketing and public relations firm that works with select startups and women-owned businesses to provide growth and visibility. Cynthia splits her time between Los Angeles, CA and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women’s NGOs about small business development.
CNET editors independently choose every product and service we cover. Though we can’t review every available financial company or offer, we strive to make comprehensive, rigorous comparisons in order to highlight the best of them. For many of these products and services, we earn a commission. The compensation we receive may impact how products and links appear on our site.
We are an independent publisher. Our advertisers do not direct our editorial content. Any opinions, analyses, reviews, or recommendations expressed in editorial content are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by the advertiser.
To support our work, we are paid in different ways for providing advertising services. For example, some advertisers pay us to display ads, others pay us when you click on certain links, and others pay us when you submit your information to request a quote or other offer details. CNET’s compensation is never tied to whether you purchase an insurance product. We don’t charge you for our services. The compensation we receive and other factors, such as your location, may impact what ads and links appear on our site, and how, where, and in what order ads and links appear.
Our insurance content may include references to or advertisements by our corporate affiliate HomeInsurance.com LLC, a licensed insurance producer (NPN: 8781838). And HomeInsurance.com LLC may receive compensation from third parties if you choose to visit and transact on their website. However, all CNET editorial content is independently researched and developed without regard to our corporate relationship to HomeInsurance.com LLC or its advertiser relationships.
Our content may include summaries of insurance providers, or their products or services. CNET is not an insurance agency or broker. We do not transact in the business of insurance in any manner, and we are not attempting to sell insurance or asking or urging you to apply for a particular kind of insurance from a particular company.
In a digital world, information only matters if it’s timely, relevant, and credible. We promise to do whatever is necessary to get you the information you need when you need it, to make our opinions fair and useful, and to make sure our facts are accurate.
If a popular product is on store shelves, you can count on CNET for immediate commentary and benchmark analysis as soon as possible. We promise to publish credible information we have as soon as we have it, throughout a product’s life cycle, from its first public announcement to any potential recall or emergence of a competing device.
How will we know if we’re fulfilling our mission? We constantly monitor our competition, user activity, and journalistic awards. We scour and scrutinize blogs, sites, aggregators, RSS feeds, and any other available resources, and editors at all levels of our organization continuously review our coverage.
But you’re the final judge. We ask that you inform us whenever you find an error, spot a gap in our coverage, or have any other suggestions for improvement. Readers are part of the CNET family, and the strength of that relationship is the ultimate test of our success. Find out more here.
You may have noticed that most card readers at your local grocery or retail store ask you to insert — instead of swipe — a credit card now. Many retailers and businesses are also providing contactless payments, which involves tapping your card on a reader to complete a transaction. As credit card chips become the standard, the days of swiping may soon be over.
Known as EMV chip cards or chip-and-PIN cards, these cards are embedded with a small gold- or silver-colored microchip to securely manage your transactions. The security built into this chip makes it harder to copy the information stored on the credit card, offering a safer alternative to traditional magnetic-swipe cards. In fact, credit cards with chips have reduced card-present counterfeit payment fraud by 76% from 2015 to 2018, according to Visa.
You probably already have at least one card with a chip, if not more. If you don’t, you may want to ask your credit card issuers to replace your magnetic-stripe cards with chip-and-PIN cards.
EMV stands for Europay, Visa and Mastercard. Although US companies frequently adopt technology ahead of the rest of the world, EMV chips were first used in Europe as early as 1986, and credit cards with chips didn’t take off in the US until the mid-2010s.
That’s in large part because Mastercard and Visa set a deadline of Oct. 1, 2015 for all US credit card issuers to replace magnetic-stripe cards with credit cards chips. As an incentive to transition to EMV chip cards, fraud liability would shift to the bank or merchant that did not make the change by that date. By the end of 2020, nearly 73% of all card transactions made in the US used EMV chip technology, and 75% of US stores were accepting credit cards with chips. (For comparison, more than 99% of the transactions in Europe are with chip cards.)
EMV has become a global standard in more than 80 countries, according to Jason Bohrer, executive director of the US Payments Forum, a nonprofit organization that supports the payment industry. “The standard defines how cards are authenticated using cryptograms, unique transaction data and other techniques to protect against counterfeit cards,” Bohrer said. “It also defines other security practices such as how cardholders are verified and transactions authorized.”
When you insert your chip card, keep it in your possession.
To use a chip card, you insert your card into a card reader (often referred to as “dipping” your card) and then follow the instructions to complete the transaction.
According to Bohrer, the way chip cards secure transaction information makes it difficult for thieves to steal or counterfeit the cards. With each transaction, the chip card creates a unique key, so even if a thief does steal that key, it is valid just for that one transaction. “Chip card transactions provide advanced security in-store and at the ATM by making every transaction unique. And if the card data and the one-time code are stolen, the information cannot be used to create counterfeit cards and commit fraud,” he explained.
EMV cards originally came in two styles: chip and signature, or chip and PIN.
As you could guess, the chip-and-signature method required you to sign to authorize the transaction. Chip-and-PIN cards added an additional layer of security by requiring you to enter a PIN code to verify your identity. That makes the chip-and-PIN method the more secure of the two since signatures can be forged.
However, chip-and-signature EMV cards often no longer require a signature. Credit card companies formerly used your signature to confirm your identity, which was helpful if your card was stolen. However, now you can freeze your card if it’s lost or stolen, and electronic card-readers can recognize if a card has been frozen or reported stolen. You might still sign when you use a chip card depending on the merchant’s policies or point-of-sale technology. You might also sign when you dine at restaurants so you can add a tip to your total.
While chip credit cards have caused a significant drop in fraud, they’re not completely foolproof. To keep safe, cardholders should take measures to protect themselves against card fraud in a few ways.
If you don’t already have a chip-and-PIN credit card, see if you can request one from your credit card company. If your credit card company can’t provide you with one, consider using a different credit card with better security.
EMV chip cards are safer because the chip credit card doesn’t need to be handed over to a cashier. Insert the credit card yourself into the card reader, and follow the prompts to complete the sale while keeping your card in your possession.
By the end of 2020, nearly three-quarters of all credit card transactions in the US used EMV chip cards. However, you may run across a business that is holding out from moving to chip-card readers. If you can help it, avoid card readers that require you to swipe instead of inserting, or dipping, your card into the reader.
If you have no other option, inspect the card reader carefully. Skimming is a danger associated with magnetic stripe cards where thieves place a fraudulent card reader over a legitimate one to steal the information on your magnetic stripe and then duplicate it. If the card reader, such as one at a gas pump or ATM, looks loose or poorly anchored, or like it’s been tampered with, don’t swipe.
If you worry that your personal and financial information has been stolen off your cards, you can take another step to guard your privacy by freezing your credit. When you freeze your credit, creditors, companies and individuals will be unable to view your credit file or open a new line of credit in your name. Freezing your credit is free. Plus, you can freeze and unfreeze your credit for set periods of time to allow (or block) access to your credit reports. You can also choose to have your credit monitored and receive alerts if someone tries to use your information fraudulently.
While most retailers use EMV card readers, some types of businesses are slow to switch over and are still vulnerable to card fraud because of card skimming.
For example, at gas stations, switching to EMV-ready terminals can be costly because the card reader is integrated into the gas pump itself. Because of the additions, credit-card companies gave gas stations and convenience stores a deadline of April 2021 to comply. However, less than half made the April deadline, despite the fact that liability has now shifted from the card issuers to them.
Tapping your card on a reader has become common, especially during the pandemic.
Chip cards may still feel relatively recent in the US, and the next step in using them is already here: contactless payments. This involves tapping your card (or phone or smart watch) on a reader to complete a transaction.
This new payment method uses NFC, or near field communication, to communicate with a reader a couple of inches away. EMV chips can be read without having to be dipped into a credit-card reader with NFC technology. Apple Pay is another good example of NFC at work. You use your phone’s passcode, facial recognition or fingerprint reader ID to secure the transaction.
Because both dipping your chip card into a reader and tapping your chip card use the same underlying EMV security protections, both are secure ways to make a transaction.
According to Bohrer, whether you’re dipping or tapping for in-person transactions, you’ve already reduced the likelihood of card fraud significantly. “All EMV payments, whether contactless or with contact, are secure,” he said.