Chip-Embedded Cards Help Fight Fraud

Reducing fraud in the banking world is an ongoing battle. Fortunately, there are numerous weapons available to fight back, including chip-enabled debit cards, also known as EMV cards.AdobeStock_90732811

Banks and other financial institutions have been issuing these cards within the past year or so after seeing how successful they were in deterring fraud in Europe. The cards are embedded with computer chips and tethered to technology that’s used to authenticate chip-card transactions.

The cards take advantage of EMV technology. EMV stands for Europay, MasterCard and Visa – a global standard for credit and debit cards. All BankFive debit cards now feature this EMV chip technology.

Chip-embedded cards have been replacing older cards that rely on a magnetic stripe to store data. The problem with magnetic stripe technology is that the data doesn’t change from one transaction to another, which makes it easier for crooks to steal sensitive card information when the card is “swiped”. The stolen data can then be used to create counterfeit cards.

When a chip-embedded card is used for payment in a chip reader however, the chip creates a unique transaction code that cannot be used again. As a result, if a thief creates a fake card based on transaction information stolen from a chip-embedded card, the counterfeit card will be denied because the information will be outdated.

Although EMV chip-card technology is not foolproof when it comes to preventing fraud, it does create a significant roadblock for crooks.

Like other banks, BankFive has issued chip cards to help protect its customers. Although the new cards may take some getting used to, people are becoming familiar with the process of inserting their chip card into a chip reader when paying for merchandise. This process is called “card dipping”, as opposed to “swiping”.

When a card is “dipped,” information flows between the card’s chip and the issuing financial institution to verify the card and create the unique transaction data. This process takes a few seconds longer than swiping a magnetic-stripe card, but the added security is well worth the short wait.

You may have noticed that the switch to this new technology hasn’t occurred overnight. In fact, there are still retailers out there that do not have chip readers in place, largely due to the cost involved with installing them. Fortunately, chip-embedded cards are still equipped with magnetic stripes on the back of them so they can be used at traditional checkout terminals where chip readers have not yet been installed.

And, some banks have not yet fully rolled out EMV chip-embedded cards to all of their customers. It’s estimated that between 400 million and 600 million chip cards have been issued since the transition to the new technology began in October 2015. Those numbers will continue to soar as both banks and retailers finish the switchover.

Of course, even though chip cards provide an additional layer of fraud protection, consumers shouldn’t totally let their guard down. It’s still important to check your card statements on a regular basis, and monitor your bank accounts to ensure there’s no unusual activity. If such any suspicious activity is discovered, it should be reported to the bank or card issuer immediately.

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