Chip-and-PIN credit card purchases are much safer than conventional purchases using a magnetic strip. A one-time code that passes between the chip of your card and the point of sale terminal of the store is generated when you make a transaction using your Chip-and-PIN credit card; the data is worthless except for the parties concerned.
Chip-and-PIN cards have a square-shaped microchip that produces and stores unique information for each transaction, unlike previous cards that used a magnetic stripe containing cardholder information. As such, chip-and-PIN cards are less vulnerable than previous credit card generations to fraud.
Here’s everything you need to know about chip-and-PIN and how it can benefit you!
For credit card holders, credit card skimming remains a big concern. In 2013, 40 million credit card and debit card accounts were hacked, U.S. retailer Aim was the victim of a massive skimming attack. They will copy it onto a fake card once the fraudster has your credit card details and start racking up charges at your expense.
Although conventional magnetic stripe credit cards are readily cloned, it is almost impossible to duplicate Chip-and-PIN credit cards.
A point of sale system would have hardware that allows this information to be “read” by a computer like a card reader.
The PIN offers an additional degree of authentication–an improvement to a printed sales receipt of the purchase from older credit cards that used a magnetic strip paired with a signature (that will fit the cardholder’s signature on the back of the card).
How It Works
Both these drawbacks are strengthened by Chip-and-PIN cards. They overcome the need for physical records, despite having the same size and shape as magnetic stripe cards since the POS device can detect electronically if the customer has given a correct PIN.
The use of a PIN often circumvents the need for workers to check that the signature matches the one displayed on the card. Simultaneously, the embedded microchip decreases the risk of counterfeiting each time the card is used by generating unique transaction codes.
Chip-and-PIN cards reduce the risk of credit card fraud through these steps. After all, would-be thieves, using fake signatures, do not necessarily approve transactions.
Instead, they will need to know the PIN of the actual user, which is complicated given that if they learn that their credit card has been stolen, the existing user will quickly change their PIN.
Advantages of Using the Chip-and-PIN Credit Card
Chip-and-PIN credit card purchases are not only safer, but they’re also done in less time. You are allowed to sign a receipt when you make a transaction using a standard credit card. You type your PIN quickly into the keypad of the point of sale terminal with a Chip-and-PIN credit card instead of signing it.
You don’t need to overthink a thief going on a shopping spree on your dime if your credit card is lost or stolen. Similar to your debit card, to allow transactions, your PIN must be entered each time.
However, protecting your credit card is still necessary, as fraudsters can swipe your credit card at retailers that do not yet have a chip-enabled point of sale terminals and can even make online transactions.
Near Field Communication (NFC), which securely stores and transfers card information, relies on mobile payments. But although this technology works on some legacy magnetic stripe data readers, Visa adopted new rules requiring that EMV technology be actively supported by all terminals accepting contactless payments.
Upgrading to a chip-reading credit card terminal that can also accept contactless payments, such as PayJunction’s Smart Terminal, is increasingly making sense as mobile payments proliferate.
Disadvantages of Chip-and-PIN Credit Card
Some chip transactions can also be slowed down by the same thing that makes chip cards safer. Credit card chip readers typically need an added piece of software known as middleware to produce a unique code for each transaction.
Outside the credit card hardware, this so-called middleware works, transferring transaction data between the terminal, the POS device, and the processor, communication that adds time to each transaction.
But the Smart Terminals of PayJunction can bypass the EMV middleware without sacrificing security. This is because, instead, the Smart Terminal connects via ethernet to your computer and is cloud-controlled, so that cardholder data is never stored on your system.
This bypass will reduce the amount of time needed to process a chip transaction to just 3.61 seconds or almost four times faster than a middleware-requiring EMV terminal.
A multi-million dollar concern is credit card fraud. It’s your duty as a credit cardholder to do everything possible to protect your information. The safety and security of Chip-and-PIN technology are provided by most distributors in Canada today.
Although Chip-and-PIN is a lot safer than swiping, it’s still necessary to be careful and watch for skimming devices to avoid falling prey to fraud.