Earlier this month we sent our older daughter off to London for her junior year abroad. We made sure she had a credit card as well as her debit card as a backup. What we hadn’t ensured was that both cards were chip-enabled or EMV cards. (EMV stands for EuroPay, MasterCard and Visa, which were the first companies to introduce chip cards overseas.) Her credit card is; her bank debit card is not.
Why does having an EMV card matter here? Well, on October 1, the credit card industry has told retailers that if they don’t have EMV readers in the stores, the stores will no longer be covered for any fraud that might happen if credit card information is skimmed. In other words, October 1 is all about a liability shift between card issuers and retailers. From the consumer point of view, the EMV cards are more secure because the information on them is less likely to be stolen when you use cards at the store. Even so this first generation of EMV cards will still have the swipe stripe on the back because, according to the National Retail Federation (NRF), convenience stores and gas stations have until 2017 to get EMV readers in place. The NRF estimates, though, that at least 70 percent of Americans already have one chip-enabled card in their wallet. I spoke with some credit card experts on why consumers should be happy to have EMV cards in their wallet, how they change the in-store shopping experience, and what you should do if, like my bank, your credit or debit card issuer hasn’t yet sent you one of these newer, safer cards.
You dip rather than swipe. Unlike traditional credit cards, EMV or chip-enabled cards require you to dip your card (like some ATM machines do) rather than swipe it. Perhaps this might be the biggest difference from the consumer side. Also, the “dipping” takes a little longer for information to transfer so you’ll need to be a bit more patient before removing your card—it might take as long as 30 seconds. Don’t worry—this is a good thing, not a sign that your data is being stolen.
Chips protect from skimming but not online fraud or identity theft. “The microchip in chip cards generates unique, dynamic data every time a consumer completes a transaction in a store, making it harder for fraudsters to collect their card information,” explains Jon Krauss, senior manager of card payments and re-issuance strategy at Discover. “In turn, it is more difficult for hackers to copy and use credit card information.” So if someone has set up a skimming device, which is meant to steal your credit card information as you swipe, the chip should stop this. However, you still need to practice smart online shopping practices with these new cards as scammers are still out there, online, looking to steal your information.
Some chip cards require a PIN, not a signature. Before you head out to use your new EMV card, find out from your card issuer if your card requires a PIN to use (in lieu of your signature) or whether it is signature only. I don’t know about you, but the only PIN I know is for my debit card. I would not be prepared to enter a PIN for a credit card, as I’ve never been prompted to create one before. So this will require a change in our shopping and spending behavior. “Customers should call their banks upon receiving the card and set up their PIN numbers to ensure security,” recommends Erdal Yazmaci, chief channel officer of Cardtek, a company that provides software for financial transactions and providers of EMV migration solution. If you haven’t yet received your chip cards, you don’t have to wait for your card issuer to send you one, though most should be in your mailbox by the end of 2015. You can beat them to the punch by calling the toll-free number on the back of your existing card or going online and requesting one. I wish I had thought of this before sending my daughter off to Europe so she would have had two chip-enabled cards to use during her semester abroad.