You may have noticed that your latest debit card has a metallic chip on it, right above the numbers on your card.
This is new and different than the way things used to be. And you may already be aware of these changes, but I really wanted to have something about it on my blog, specifically my experience with it.
As you all know, I’ve never had a credit card. This is my personal choice, so for real please keep negative comments about this decision to yourself (can you tell this happens a lot?!)! The spender in me wants nothing to do with credit cards, even knowing the rewards I’m giving up. It works for me. So, instead, I use my debit card as credit.
All that is to say this new chip-thing is really important to me.
I had read a bit about the chip, but I wanted to dig deeper. Here’s what I found…
The Old Way – With the Card Strip
Prior to the chip reader, you had a magnetic strip on the back of your debit card.
This strip stored your name, account number, expiration date, and security code.
If you could get ahold of the information inside the magnetic strip, you could steal that person’s credit card and/or identity.
This strip had data stored in it that never changed – it kept all of your personal info saved at all times.
The New Way – With the Chip
This new chip on your debit card is a Europay/MasterCard/Visa (EMV) chip. It’s called this because these are the companies that created the technology. You may here people call this system “chip and pin”. And it’s not new – it’s been around for 30 years. It’s just new here in the U.S.
The chip uses a unique code for each transaction. This means every time you use your card, a new code is used to verify and authenticate the transaction.
The chip is an alternative to the strip. The chip doesn’t hold your information, making it inherently more secure. You can’t copy the chip information because it’s always changing with each transaction. You could copy the strip information because it never changed.
Remember the Target hack in 2013? This was the hack where customer information was compromised after someone hacked Target’s system. If you used your debit card (with the strip) at Target, your information was included in the hack. But with the new chip reader, this couldn’t happen because your information isn’t stored on the card anymore.
How to Use the Chip
With the chip, you insert your card into a card reader that accepts the chip. Then, you either enter your pin number or press some version of “enter” to process as credit and avoid using your pin. I prefer the second option because I like to avoid using my pin whenever possible.
And let me tell you that I have had an interesting experience. Since companies are just starting to use the chip readers, they don’t always know what they’re doing. I was at my preferred grocery store trying to check out without using my pin, and I was told that the way the store registered the machines made it a requirement. They sent me to my bank to learn more. I went to my bank and my bank said that the store was wrong, unless the store actually messed up in how it activated the machines. So, I went back to the store and used my card. This time, never saying a word when checking out. Instead of entering my pin, I just clicked “enter” and it worked. Yay. All that fuss for nothing.
Point being here that you may run into technical difficulties. But if you’re a debit card user like me, I think it’s best to take measures not to use your pin when possible.
Who’s Responsible For Hacks When You Use The Chip?
As of October 2015, if a retailer has not installed chip readers (and you have to use the strip), the store is held responsible if your information is compromised in a hack.
If the retailer is using chip readers, it will be either the bank that issued your card (e.g.: Chase Bank) or the credit card company (e.g.: Visa or MasterCard) that is held responsible if your information is compromised in a hack.
A Final Note!
I’m talking about in-person transactions in this post. The chip-reader doesn’t provide extra security for online purchases, unfortunately.
But for those of you using your debit card as credit, like me, knowing the chip provides a more secure way to make purchases is a little bit of a relief.
Those Target-style breaches shouldn’t happen in the future because with a chip, your card number isn’t passed on to the store.
The chip creates a unique code that’s used for one time for that transaction. Your card number and personal information isn’t kept in the retailer’s database when you use the chip reader.
So, if there is a hack, your information won’t be a part of it because it’s not stored on the retailer’s database.