The EMV Chip versus the Mighty Strip: A Credit Card Clash

posted 6/9/2015 in Banking

So what makes the chip better than the strip?

The EMV or chip credit card seems to have stolen the spotlight these days, leaving the traditional “swipe” card as hot as the cassette tape. But why all the hoopla? What makes the EMV (Europay, MasterCard, Visa) card better than the traditional?

The Chip

It’s all in the chip! EMV credit cards are each embedded with a microchip. This microchip is what houses your information and “communicates” with the terminals at each point of sale. Even better, this information is dynamic, meaning it changes each time it comes into contact with a terminal. The technology behind it is obviously very complex, but let’s think of your microchip in your credit card like a flash drive. This flash drive houses information that is then “rewritten” each time your credit card is put into the terminal (or the computer in this scenario). If a hacker were to gain access to the data used at your transaction, it would no longer be feasible to use it because that data was changed. And if you use your credit card more than once a day, like most of the world, probably changed several times since then. (“I wasn’t overspending; I was just making sure my card was extra secure.”)

The Strip

The magnetic strip on the other hand, is static, meaning the key information it holds stays the same with each transaction. Just as the name implies, the magnetic strip on a traditional credit card is made up of several tiny magnets (20 millionths of an inch long). These magnets are polarized either North or South which then translates into data a computer reads when you swipe it through. (Think floppy disk versus flash drive. We’ll pause for your light bulb moment). Because this data never changes, hackers can steal the data and even make counterfeit credit cards all on the card holder’s dime.

Now that you know the technical stuff, check out when you’ll start to see this change!

Lincoln Savings Bank, Member FDIC.

Sources:

Dooley, Terry. “Nearly a Third of American Credit Cardholders Have #EMV Plastic in their Wallets.” The SHAZAM Network Blog. SHAZAM. Web. 13 May 2015.  

“EMV Chip Payment Technology Frequently Asked Questions.” Smart Card Alliance. Web. 13 May 2015.  

Groenfeldt, Tom. “American Credit Cards Improving Security With EMV, At Last.” Forbes. Web. 13 May 2015.  

"How does a magnetic stripe on the back of a credit card work?"  14 April 2008.  HowStuffWorks.com. 13 May 2015.

Kossman, Sienna. “8 FAWs about EMV credit cards.” Creditcards.com. Web. 13 May 2015.  

Tausche, Kayla. “ ‘Massive’ switch to new credit cards ahead.” CNBC. Web. 13 May 2015.  

“Smart Card Technology.” Card Werk Smarter Card Solutions. Jacquinot Consulting, Inc. 13 May 2015.  

“Visa Announces U.S. Participation in Global Point-of-Sale Counterfeit Liability Shift.” Visa Bulletin. Visa. Web. 13 May 2015.  

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