Written by StephanieStephanie graduated in information systems with an emphasis in cyber security management. She enjoys spending her time hiking with her children and her dogs, and playing video games with her husband.
Chip-in cards have been the standard in the United States for the last year and a half. With this new technology, many people may ask: How do they work? How does the magnetic-strip card work? Why did we need this change?
What Is EMV?
EMV is the name for these chip-in cards, and comes from “EuroPay, MasterCard, and Visa,” the three credit card companies that pioneered this new format. They are easily identified by the chip on the front of the card. EMVs have become the new standard because they offer a great deal more security than their magnetic-strip card counterparts. In a world where identity theft and data breaches are on the rise, it is important that we take preventive measures like the EMV card to protect ourselves.
How Does the Magnetic Strip Card Work?
When you run a magnetic-strip card through a reader, the information is read by the reader in plain text. Some of the information includes the card number (or account number), name on the card, expiration date, and pin number. This information is sent through the network to have the money moved from your account to the retailer. The information on the magnetic-strip is static, which means it stays the same with every swipe. This makes your card information vulnerable to hackers.
In the recent data breaches of Target and Home Depot, magnetic-strip card information was easily stolen by hackers. Malware was installed on the point of sale (POS) systems. This malware collected, stored, and sent card information to hackers to sell on the darknet. These massive data breaches affected over two million customers. While the EMV card has been the standard for Europe for many years, it was after these massive data breaches that it became apparent that we needed this technology to protect our information in the United States as well.
How Does the EMV Card Work?
The EMV card has a microprocessor chip, which generates a unique, and much more complex code for every transaction. This makes it much more difficult for hackers to gain information they can steal and sell from you. Even if a hacker received this code, it could not be used again and cannot be traced to your card. Once the information from the EMV card has made it's way across the network, the information is then encrypted, adding even more security to your transactions.
How This Changes Credit Card Fraud
Before October 1, 2015, when an unauthorized person made purchases with your card information, it was the credit card company who had to pay for the damages. Since the EMV card became standard, that rule has changed. Companies who do not support EMV cards now have to pay for any fraudulent charges made. This new change should encourage companies to support the EMV cards by using readers that support the technology.
You Still Could Be at Risk
The EMV cards are a step in the right direction, but we still have a long way to go. Not all EMV cards require a pin, some credit cards only require a signature. This means if your card is stolen, someone could still use your EMV card. Another huge risk is the shops that you frequent. Furthermore, not all stores have converted to using an EMV card reading system, and even the stores that do have the system in place may still not use it.
If you still swipe your card frequently, check your statements regularly! There is still a chance you could be a victim of a future data breach much like the Target and Home Depot breaches. If you are one of the millions who have been a victim of one of these data breaches, or if you want extra identity theft protection, check out our top identity theft companies to find the best program for you and your family.