Most credit cards in the United States feature a magnetic strip that is easily captured and copied. But in the rest of the world, the EMV chip has largely succeeded the magnetic strip as a method of making credit cards more secure. And the U. S. is fast making the switch.
American Express, Discover, MasterCard and Visa all have announced plans for joining the move to an EMV chip-based payment infrastructure, according to the Smart Card Alliance. In contrast, more than 84 percent of cards issued in Western Europe already have the chip-and-Pin technology.
The chip has been integrated into the merchant’s handling of sales. In restaurants, the waiter often brings the bill on a hand held card reader. The customer inserts a credit card into the reader, enters her PIN and the transaction is complete. The customer never loses control of the card and the chip technology has highly secure built-in safeguards against theft of the card’s information.
The chip embedded in a card has the same computing power as an X286 computer, according to Jack Jania, vice president for strategic alliances at Gemalto, which produces the chip-enabled cards and the infrastructure to support them. Each chip has an operating system and several apps, depending on the level of security, whether it works with signatures or with PINS.
The chips, not surprisingly, cost more – $1.25 to $2.50, compared with 25 cents for a traditional magnetic strip. But the added security is worth the cost. Fraud prevention has been the impetus behind the chips. American cardholders have been particularly vulnerable to fraud. The introduction of the chip, along with other anti-fraud measures over the next couple of years, is expected to make big inroads into the problem.
BMO’s Diners Club, which has headquarters in Canada, where the chip has been long entrenched, was the first to introduce the chip onto the American scene, followed by the United Nations, the U.S. State Department and Andrews Air Force Base, all of which have many international interactions. Other American companies, including popular national merchants, are rapidly adopting the technology.
Some American banks now offer chip-implanted cards to top corporate accounts, but don’t promote them below that level, to the chagrin of some travelers. The situation is aggravated for them because some merchants in foreign countries shun America’s traditional magnetic strip cards. As the complications multiply and more Americans find themselves in long lines waiting for a teller to process magnetic strip cards, the impetus for the switch will magnify, industry leaders predict.
Both for the convenience in travel and for the added benefit of more anti-fraud security, the chip is coming and it can’t come too soon for many Americans.