Credit Card Chips

Published August 14, 2015

I recently received a new credit card in the mail. It was sent because the credit card company was implementing new “digital chip” technology in all their credit cards.

I really don’t know much about the digital chip. Some months ago I remember seeing a customer in line ahead of me use a chip card. Other than that, I am unfamiliar with cards that contain chips. So, I’ve started some research.

As I understand it, my new card inserts into the bottom of the card reader when I use it to make purchases.  According to Computerworld’s Matt Hamblen, this new feature means a more secure card.

“Chip cards are light years ahead of magnetic stripe cards in terms of security,” explains Hamblen. “The main thing to know is that the chip in the card is communicating with the network behind the terminal to enhance security instead of just forwarding your card number and data to the network, as with the magnetic stripe.”

October 1 is the looming deadline for retailers to begin accepting chip cards. Banks are tired of being on the hook for credit card fraud, when the fraud can often be traced back to the poor security on the retailer’s part. As of October 1, liability for credit card fraud will shift from the bank to the merchant, or to the party using the least secure technology.

In theory the card holder should not be affected by the switch, except by virtue of receiving a new card. Hamblen does warn that consumers using the new cards will have a learning curve. Because we are so used to “swiping” instead of “inserting”, checkout times may be slowed a bit. But all in all, the digital chip should be worth the wait, if in fact it does help improve security when making credit card purchases in a physical retail setting.