Why Your Debit Card Now Has a Computer Chip

Why Your Debit Card Now Has a Computer Chip

If you have received a new debit card in the mail recently, you may have noticed one key addition — a computer chip.  Credit and debit cards with a computer chip have become the norm globally because they are generally safer for in-person purchases.

Here’s what you need to know about your new card:

Chip cards are really hard to clone

Magnetic-stripe cards are, well, magnetized. When you swipe them, the payment processor reads their magnetic fields and matches them to your bank account information. The problem with this is that the data is static, making it easier for fraudsters to lift your information and clone it onto a new card. In fact, there’s something called a skimmer — which they can get or make for as little as $20 — that can do this pretty easily.

Magnetic-stripe cards are pretty outdated — they’ve been around since the ’60s and use the same technology as cassette tapes.  The United States is one of the last countries to still have them around; EMV has been the standard in most parts of the world for over a decade.

On the other hand, the data on chip cards is constantly changing, making it extremely hard to isolate and extract.  The computer chip — technically called an “EMV” chip for Europay, MasterCard, Visa, the three companies that created the technology standard — creates a unique signature for each transaction.  To rip it off, someone would have to get into the physical chip circuit and manipulate things to get your bank information. Not only is this level of data surgery really difficult, but it also requires a set of high-tech equipment that can cost north of $1 million. That’s not the kind of cash your average fraudster has handy.

OK, so the change sounds good. Why now?

It isn’t due to some new governmental regulation or law, but rather the result of a liability shift. MasterCard and Visa decided together that, after Oct. 1, 2015, whichever entity (bank or store) had the lesser technology would be financially responsible in the event of a hack. (Before, only the issuer was responsible.)

So if a bank doesn’t issue an EMV card, it will be on the hook for any fraud that occurs. Ditto for a store that hasn’t installed a new terminal capable of reading the card. (If both have the technology, a MasterCard spokeswoman argues, there simply won’t be any counterfeit fraud.)

Will EMV make online purchases safer?

No. Transactions made online or by phone aren’t affected by EMV technology, making electronic fraud an attractive alternative to skimming for fraudsters.

What can you do?  Be vigilant. Sign-up for text alerts after purchases if possible, and monitor your transactions online. If you see a problem, call your bank.  You are generally not responsible for the fraud that is committed on your card as long as you notify your financial institution within a certain time period.

I don’t have a chip card yet, how do I get one?

Your card will automatically be replaced by a chip card at your next renewal.  If you would like one before then, please call and speak to one of our Member Service Representatives to order one.  Fees may apply.