Microchip credit cards, image by Hywel Clatworthy (cropped).
If you’ve never heard of microchips, you’re about to, because banks and credit card companies are beginning to add them to more of their cards in an attempt to increase security. Retailers are also beginning to add more microchip readers to their card reader devices, in order to help shoppers take advantage of the newer technology being offered on their debit cards and credit cards.
Many credit cards and debit cards already have microchips, but even more do not. Even if your card has a microchip, you may find it all but useless, as most retailers have only the swipe functionality available on their card readers.
Chip cards, as cards with microchip technology are often called, have a silver or gold chip that allow for more security than the magnetic strip most are used to using when making a purchase. Chip cards are commonplace in Europe, but are seldom seen in the U.S. It’s a big contributing factor to half of the world’s credit card fraud taking place in America, in spite of only a quarter of all credit card transactions coming from the country. In fact, the United States has more money lost to credit card fraud than the rest of the world combined. That’s a sobering statistic.
Walmart is one retailer that has begun transitioning to allow for microchip cards to be used at their stores, and many more are set to follow suit. By October of this year, most banks and credit unions will have made the switch, and many retailers will follow in Walmart’s footsteps.
Major data breaches affecting Target and Neiman Marcus shoppers helped bring the issue of credit card fraud to national attention, resulting in a Senate Judiciary Committee hearing last February, which called for better protection for consumers. Banks, credit unions, and retailers have finally heeded the call.
Of course, this won’t help the security for online purchases, but at least it will make fraudsters work more difficult for in store purchases. However, even with those types of transactions, this isn’t a magic bullet solution. As security journalist Brian Krebs told NPR, the microchip cards “simply raises the costs for the bad guys…It’s not that they can’t break the system — but it makes it more expensive for them to fabricate these cards.” If nothing else, that’s at least something, and in an era where shoppers are getting more and more concerned about the safety of their data, that is welcome news.
How to Use a Microchip Credit Card or Debit Card
Are you excited about the new chip cards becoming more widely available in the United States? Let us know in the comments.
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