EMV chip cards: How does it work?

A credit card is useless without the chip inside it. Here is what you should know about credit card chips

The present and future of electronic payments is always changing. Financial firms, businesses, and payment systems are constantly developing new technology and best practices to make electronic payments safer and hassle-free for organisations and consumers. Chip card technology, which is also called chip-and-PIN or EMV chip, is one of the latest advances in the field.

Chip card technology is a safe way for retailers and their consumers to store and exchange confidential credit card and debit card account information. This article will tell you everything you need to know about the chip in a credit card.

What is the chip inside your credit card?

Chip cards have replaced magnetic strips in the last decade. They have helped increase accountability in cases of fraud. If the card has an EMV chip and the merchant does not support EMV chip transactions, the bank's responsibility for counterfeit fraudulent transactions is diverted to the merchant.

EMV chip cards have gained traction as the global norm for credit card payments. EMV stands for Europay Mastercard and Visa, the companies that created this technology. EMV chip cards have sophisticated security measures that prevent illegal transactions and malpractices, such as skimming and cloning of credit cards.

How does a chip in a credit card work?

Unlike magnet strip-based credit cards, an EMV chip-based credit card does not support a swipe-and-go transaction. You must place your card in a slot underneath the numeric keypad at an EMV-enabled machine. After you have inserted your card, you must follow the on-screen instructions. You must leave your credit card inside the machine until the process is completed.

As opposed to swiping your card, transactions using EMV chip-based credit cards take longer to complete. It is worth noting that not every merchant will have EMV-capable terminals. Assume you are using a terminal that is not EMV-compatible. If you have an EMV credit card, you will have to scan it to complete the transaction. And while making online purchases using EMV credit cards, you will need to input your card number, expiry date, security code, and billing address.

Safety in chip cards

Chip cards are far safer than the previous generation of stripe cards, which had sensitive customer data stored on the magnetic stripe. To conduct a swipe card transaction, terminals merely had to scan the data on the magnetic stripe, and the consumer would then sign to validate the transaction.

While chip cards deliver the same information as magnetic stripe, they are safeguarded by encryption and similar technologies. This makes it harder for scammers to commit frauds. Chip cards give card issuers the ability to generate individual transaction data for each transaction and secure the information created.

The requirement for a PIN also eliminates the risk of signature fraud. That said, consumers and businesses should take fraud seriously because chip card technology cannot ensure 100 per cent security.

While chips have undoubtedly made credit cards safer, always get a credit card from a renowned financial institution or bank, such as IDFC FIRST Bank. It helps provide an extra layer of security, trust, and safety. Even if you are applying for an online credit card, your confidential details will be secure on the bank’s servers, thanks to advanced encryption. The bank does everything in its power to stop fraud or theft on its android banking app and website.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.