Written by Edwive Seme
Imagine this: You’re out buying the latest Playstation and your card is declined. Someone has stolen your identity and credit card info! With the convenience of having credit and debit comes the danger of having your financial information hacked. Although banks try to provide security with identity theft protection and calling when unusual purchases at unusual locations are made, card thefts remain a problem in the US. A new solution has been unveiled: By next year, all credit/debit cards will be chipped.
The US is rather late with its decision to start using chipped credit cards; Europe, Canada, and even Mexico has used chipped credit cards for years and it comes in handy when traveling abroad. Although this method is more secure, most US card issuers have avoided it due to its more expensive aspect, so instead of getting rid of the magnetic stripped credit cards, they employed other less expensive methods. As we continued to use the magnetic strips, frauds continued to increase.
The good news: By 2015, we should be switching to chip and sign cards. EMV smart card technology is a joint effort of Euro pay, MasterCard, and Visa, that has been around since the 2000’s but it has rarely been used in the US unless someone is traveling abroad. EMV cards come equipped with microprocessor chips that encode the information sent during purchases differently on each transaction, making it hard for thieves to clone cards. Even if a thief was to get his hands on data from an EMV card during purchase, it wouldn’t be of any use to him since the data is constantly changing. These chips are therefore harder to hack into and use.
We are still a step behind since we’ll only be using chip and sign while other countries have been using chip and PIN, but that doesn’t make much of a difference unless a thief was to stumble upon the physical card itself. Merchants will also have to adapt and update their payment systems to accept chipped credit cards, which will require more expenses, but then again, safety always comes with a price.
These cards should be available by the end of 2015, but some financial institutions already have the cards in the US. For example, American Express, Bank of America, Capital One, Discover, and Wells Fargo have some options of chip and sign available upon request.
In the meantime, some of the safest ways to protect your finances would be to use cards with PINs since they’re a little bit harder to use if stolen, make sure you don’t use your card info on sites that you’re not too sure about or not accustomed to, and it’s always a good idea to get identity theft protection at your bank. It’s a small fee but it helps.