The Chip in the Card

In the past year, you may have received a new credit or debit card with a small microchip embedded in it.  Such Chip 'n' PIN cards or "EMV" (Europay, MasterCard, and Visa) cards are being issued by many banks and credit card providers in the United States in an effort to prevent card-skimming operations and undermine large-scale credit card breaches - such as the massive data breach at Target in 2013, where approximately 40 million consumers had credit card information stolen.

On traditional credit cards, the magnetic stripe on the back of the card contains personal information about the cardholder that is used to authenticate the credit card at a point of sale (PoS) terminal before the purchase is authorized. This process is frequently exploited. Increases in technology have allowed hackers to develop methods like "card-skimming" to emboss stolen data and record the card number and PIN onto a blank card for fraudulent purchases.

Why The Switch to Microchips?

Because technology is available on the black market for both reading and writing the magnetic stripes, making cards easy to clone and use without the owner's knowledge, many U.S. banks and retailers are replacing magnetic-stripe credit and debit cards with microchip cards. When a consumer uses an EMV card at a chip PoS terminal, that transaction is protected using the microchip technology and prevents card-skimming operations.

How It Works

EMV cards have an embedded microchip that authenticates the card to prevent hackers from copying stolen card data for fraudulent transactions. The microchip contains the same information that is stored on a traditional card's magnetic stripe, but it also has a certificate used to digitally sign each transaction. Unlike traditional magnetic-stripe cards, every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again. Thus, even if a thief steals the card data, the code needed for a transaction can't be generated without the certificate. Experts hope this technology will help significantly reduce fraud in the U.S.

EMV cards are already implemented widely in Europe and Canada.

If you believe you have been a victim of credit card fraud, contact your credit card company immediately, reach out to your local law enforcement office, and file a complaint with the Internet Crime Complaint Center (IC3) at www.IC3.gov.