What is an EMV Card?

EMV or Europay, MasterCard and Visa Cards are now making their way to the U.S. and many of you may have already received one. EMV cards have a small computer chip embedded on the front to better protect you from fraud. So how exactly do these cards work?

Traditional debit and credit cards use a magnetic strip that stores data, this data contains personal financial information making us easy targets for fraud. The beauty of these new chip cards is that the computer chip creates a unique code every time you use it to protect your information. Each code can only be used once so if someone steals one of your codes it will be denied.

New card terminals will be placed at retailers; some retailers have already upgraded their terminals so if you have a chip card already you are good to go. You will now “dip” your card instead of “swipe”…what does that mean?!  Basically you will insert your card into a slot and once the data from the chip has been processed your card can be removed. It is not an instantaneous as swiping so you will have to be patient.

As of right now most of the chip cards being distributed are chip-and-signature, meaning they will require a signature at the time of each transaction. This will not be much of a change from how we have been using our credit cards. Within a few years there will be another change, this time to a chip-and-pin card, where a PIN is entered instead of a signature, just like a debit card. The PIN is the next step in heightened security. Those of you who have recently traveled to Europe are already familiar with process.

Some banks and credit unions may already offer these chip-and-pin cards, since this change is so new majority will not. I would recommend checking if you are planning to travel abroad soon since some places only accept chip-and-pin cards such as tolls and parking garages, but majority of places can process transactions using a signature. Do not be discouraged if you have not received your EMV cards yet, this transition process recently began and will continue through 2015.