Chip Into Security

Most of our credit/debit cards now have chip technology, but sometimes it’s hard to know when and where to use them. Some merchants want you to use the chip, some terminals have a chip slot but aren’t set up for use yet, and some don’t have chip slots at all. What’s the deal? Here’s what you need to know about chip-enabled credit/debit cards:

For consumers…

  • Try “dipping” your chip first. Using the chip is more secure than using the magnetic stripe, so try that first. The terminal or store associate will let you know if you need to swipe instead.
  • The chip on your card is more secure than the magnetic stripe. The magnetic stripe contains information about your card such as your card number that can be read and copied fairly easy. The chip, on the other hand, is actually a tiny computer that is able to identify itself in a way that is very difficult to copy.
  • My chip-enabled card has a magnetic stripe. Can that still be copied? Well, yes. But generally speaking, if your card is chip-enabled and so is the merchant terminal, the terminal won’t accept magnetic stripe data or fraudulent data copied from your card.
  • My card doesn’t have a chip. How do I get one? Is it worth requesting? Most card issuers include chips in newly-issued cards. Having a card with a chip can prevent someone from using a counterfeit version of your card at a retailer that accepts chip cards. If your card information is compromised it can still be used online and at retailers that aren’t prepared to accept the chip. However, if you are interested in the extra peace of mind from knowing someone can’t skim your card and just walk into Wal-Mart with it (which happened to me with my non-chip card), consider asking your issuer if they can send you a new card with a chip.
  • Keep your chip in working condition. Generally speaking, the chip in your card is pretty resilient. It’s more scratch-resistant than the magnetic stripe and isn’t affected by magnets. But occasionally a chip may stop working due to manufacturing defect, wear, or dirt. I haven’t heard many people complain of having a dirty chip, but after having mine in my wallet for a while, it came out with black dirt that I can only assume was leather dye. I was able to remove it with a regular pencil eraser. If you are consistently having problems getting your chip to work when you pay for something, request a new card from your issuer. Some issuers won’t authorize the magnetic stripe on a chip card so if your chip isn’t working, you might be stuck without a valid payment method.
  • Be patient. Because the card has to remain in the terminal while the transaction is processed, it can seem like transactions take longer to process. But don’t worry, the transaction still takes about the same amount of time and the extra security is worth it.
  • Don’t sweat it! As a consumer, having the chip shouldn’t make a big difference in our day-to-day lives. Either the merchant or your card issuer, not you, is still liable for fraudulent transactions. Always be sure to monitor your card statements so you can report any fraudulent activity promptly.

For Business Owners

As a result of the liability shift in October 2015, card issuers are no longer covering card-present fraud when the card has a chip and you (the merchant) are not prepared to accept the chip. Here are some things you can do to help protect your business from card-present fraud:

  • Prevent what fraud you can. When you handle a card, examine it for signs of modification or tampering. Check security features like the expiration date or the hologram on MasterCard® and Visa®. If the transaction is signed for, compare the signature with the one on the back of the card. If they don’t match or the card isn’t signed, ask for ID or refuse the card. In fact, don’t be afraid to ask for ID at any point. Customers who are both legitimate and reasonable should thank you for helping protect their identity. If you feel a transaction is risky, you can always refuse the card after you weigh the risk against the possibility of turning away legitimate business.
  • Consider upgrading. Figure out how much it will cost your business to upgrade to chip-enabled card readers. Compare that with your exposure to card-present fraud and determine whether the investment is worthwhile so the liability doesn’t fall back on you.
  • Insure your risk! If you are in the process of upgrading but are waiting on equipment or certification, you may be able to obtain gap coverage for your fraud liability until you are chip-ready. Talk to your independent agent if that interests you!

Any questions you have about chip cards that I didn’t answer? Let me know in the comments!

 

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