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The Ins and Outs of EMV Cards

A person holding credit cards against a white background wall.

The credit card swipe is on its way out. In its place is a new way to buy, featuring a small microchip embedded in your plastic and promising more security. Here are answers to questions you might have about the advent of these cards, dubbed EMV cards.

First, why is it called EMV?

Europay, MasterCard and Visa led the push for this technology. It’s been in use in Europe and much of the rest of the world for several years, but is just now making its way to the United States.

What does an EMV card do (and not do)?

That familiar magnetic stripe on the back of your credit and debit card contains a static set of information — card number, expiration date — that could be obtained by criminals. They either use a skimming device to extract the data on the stripe or hack into a retailer’s database and pull the card information stored there from transactions. An EMV card comes with an embedded chip. When the card is used at the point of sale — the mall, a grocery store, anywhere where you are buying in person — the chip encrypts your card’s information and transmits a unique bit of code to complete the transaction. This one-time code cannot be used again, so someone who obtains it won’t be able to make fraudulent purchases. In addition, EMV cards require either the cardholder’s signature or a personal identification number. However, an EMV card cannot flex its extra security muscles when used online or over the phone, because then the chip is not put to use. When making purchases this way, make sure the party on the other end is trustworthy. And should you lose your card, report it immediately to prevent any fraudulent purchases.

Are EMV cards harder to use?

Not really; just different. Instead of swiping your card at the register, you insert it into the card reader and leave it there until the transaction is complete. You’ll be prompted when it’s time to remove your card. (And for now, EMV cards also have a magnetic stripe so you can use them at stores that don’t have EMV readers yet.)

Has the EMV card totally replaced its predecessor?

Not yet. There’s no law that mandates the immediate end of magstripe cards. Instead, on Oct. 1, 2015, there was a liability shift between card issuers and merchants; now, if a transaction leads to fraud, the side with the lesser technology is considered liable. That  means that financial institutions and stores alike have incentive to update their cards and card readers. However, implementation will vary. Big businesses may have their new systems up and running, while some small businesses might take a little longer. And due to high demand, some card processors may not issue new cards until 2016. In the meantime, the older cards will be usable. Get your last swipes in while you can.

Author: Lynn Mucken, NerdWallet
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