3 Things Credit Card Chip Technology Can’t Do
Although the new security chip credit cards we’re switching to in the US are touted as providing superior protection against credit card fraud, they won’t be able to make the days of safeguarding your cards a thing of the past. If you want to ensure you know the security limitations of the new credit card chip in your wallet, be sure to review the three areas where your card information is still vulnerable.
Since credit card chip technology is still in its infancy in the US, credit card issuers will still include the traditional magnetic strip on the back of their security chip cards, just in case you need to use it with a business that isn’t able to read the chip. While the transaction codes provided by the security chip cannot be used for future transactions, your magnetic strip is still vulnerable against skimming.
Furthermore, if you pay for a purchase by swiping the magnetic strip instead of using the chip and the retailer is subsequently hacked, your credit card data can be used to create counterfeit cards for fraudulent purposes.
Unfortunately, credit card chip technology is unable to protect you during online purchases. As is currently the case, you must rely on the online retailer to provide sufficient encryption to protect the credit card data you provide at checkout. Not only is your credit card data still at risk if the online company is hacked, but making purchases over an unsecure Internet connection could also allow hackers to gain access to your credit card information.
When it comes to stolen cards, credit card chip technology is making improvements, but can still leave you vulnerable in certain situations. Depending on the card issuer, you may receive either a chip and PIN credit card or a chip and signature card. When a criminal is in possession of your actual security chip card, they can still make purchases if they’re able to forge your signature, just as with magnetic strip cards.
Now, if your credit company issues you a PIN and chip credit card and the card thief tries to use it to make in-store purchases with a merchant set up to accept credit card chip PINs, the thief would need your PIN to make the transaction. Since many merchants will only have the technology to accept signatures, having the extra layer of protection a PIN provides would still be unable to protect you.
Ultimately, the enhanced security provided by credit card chip technology will be a little shaky during the transition from magnetic strip cards to chip-embedded cards. Once the US is fully transitioned and as comfortable with this new type of credit card as Europe and Canada are, the remaining security loopholes may also become a thing of the past. Until that time, always review your credit card statements each month for any purchases you didn’t make. The faster you can make your card issuer aware of this fraudulent activity, the more likely you are to be reimbursed for the charges you didn’t make.
Holmes, Tamara E. Data Breaches Turn Spotlight on EMV Cards. CreditCards.com. February 7, 2014.
Kossman, Sienna. 8 FAQs about EMV Credit Cards. CreditCards.com.