We live in a rapidly changing world that grows more “intelligent” each day. Phones, watches, and televisions—nearly everything comes with the word smart attached to it. Your credit and debit cards have grown smarter, too.
By now you may have noticed a small metallic square affixed to the face of your card. That square packs punch. It’s an embedded microchip added to provide an extra layer of protection between yourself and possible financial fraud.
So how does your smart card (or chip) work?
It’s all in the technology.
Before the chip, in-person transactions involved a swipe of your card. That simple swipe transmitted your personal data from merchant to card processor to credit card company, and, finally, to your bank for authorization. Each time you used your card, the transmitted information was unchanged and easier to steal.
The smart chip is, well, smarter than that. The chip offers a unique string of numbers to your financial institution for account verification purposes. And with each transaction, the series of numbers is different. Think of it as a password that changes each time you use it.
How will this change affect you?
As retailers convert to new card processing equipment, you’ll insert or dip your smart card (also called chip cards, EMV cards, chip and choice cards, etc.) into the credit card machine and leave it during the transaction. The process may take a few seconds longer than the old swipe method, but the extra benefit and gained safety is well worth it.
Keep in mind, the new smart chip technology only works when a machine reads the chip. In other words, if you use your smart card for online shopping, your information continues to be transmitted the old way, without the newly added layer of protection.
Remember, continue to safeguard against identity theft by protecting your financial information and being alert to unusual changes in your credit report. See this PDF for more information: Smart Cards & Chip Technology