3 Times It Doesn’t Matter If You Use a Chip Card

EMV chip cards made their debut in the U.S. last fall, and some retailers are still struggling to get the technology implemented in their stores.

The switch from magnetic-stripe cards has meant not just new cards, but new payment processes, as well, which some folks have found frustrating. While the transition hasn’t been easy for some businesses and consumers, it means greater protection against fraud for a wide range of transactions.

Unlike the old magnetic-stripe cards, EMV chip cards create a unique transaction code that cannot be used again. For example, if a hacker stole the chip information from one specific transaction, it wouldn’t be usable again.

“Issuers do not want their cards to be used at point of sale with a magnetic stripe anymore, as the stripe is highly susceptible to compromise, where chip-based transactions are not,” Seth Ruden, a senior fraud consultant with Florida-based ACI Worldwide, said in an email.

While EMV technology doesn’t prevent data breaches from occurring, it can make it much harder for criminals, except in circumstances where the chip’s encryption capabilities aren’t used. Here are three scenarios where using a chip card won’t make your transaction any safer.

1. Online & Over the Phone

Buying some new shoes online? Ordering flowers over the phone from the local florist for your aunt’s birthday? These “card-not-present transactions” mean your debit or credit card details, most often including not just your name and card number, but also the three-digit CVV code, must be shared in full. The EMV chip card’s encryption is completely bypassed in these cases, and a chip card is no more or less safe than a non-chip card.

2. At Retailers Still Using Swipe Machines

While businesses that accept credit and debit cards could face increased liability for fraudulent transactions conducted with stolen cards or data if they don’t have EMV readers in place, there’s no law mandating that they actually have them. So, if you’re purchasing something at a store that still requires you to swipe your card, any additional protections offered by the chip aren’t doing you or the merchant (or the card issuer) any good.

“Anything that is magnetic stripe based is holding back the security efforts, and exposing the bank, merchant and the cardholder to prolonged risk-exposure during this transition period,” Ruden said in an email.

3. When Your Card Is Carbon Copied (Old-School Style)

Remember the old manual credit card imprinters? The merchant lays your card in the little slot, places the carbon copy receipt on top then pushes the imprinter handle over it, making that satisfying “ka-chunk” sound?

Or how about when the delivery guy runs that same carbon copy receipt over your card and runs his pen across it?

If you’re getting a delivery, or if you’re at a merchant who is experiencing a power loss or other digital failure, your chip card isn’t going to make a bit of difference in protecting the transaction from possible fraud. There are now pieces of paper with your card details on it that can be lost or stolen.

One of the best things you can do to protect yourself from stolen credit card information is to regularly check your account statements for signs of fraud. You can also spot possible fraud through sudden, unexpected changes in your credit score. You can keep track of that by getting your free credit report summary, which is updated every month on Credit.com and includes two of your credit scores. As soon as you identity something suspicious, act quickly to minimize the damage.

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Annoyed With Your Chip Credit Card? You’re Not Alone

chip credit card

Some consumers are so annoyed by the new chip-enabled credit cards that they’ve begun avoiding stores that require them, a survey from Mercator Advisory Group, a payment industry research firm, claims. That’s an unwanted headache for small business owners, especially those fighting for shoppers during the busy holiday season.

The “avoiders” group is small but significant — 7% of consumers who hold a new EMV card and have tried using it, a number that represents roughly only 2% of U.S. adults. But young adults were nearly twice as likely (13% of EMV cardholders) to tell surveyors they “avoid stores that force me to dip my chip,” Mercator says.

“While consumers want the added security, consumers are having issues with the early implementation of it,” said Karen Augustine, manager of primary data services for Mercator and the author of a report on the survey. “U.S. merchants have not yet widely implemented the EMV card readers, but it’s happening more and more. With the holiday season, new implementations may have difficulty managing customer experience.”

The survey was taken in June, before the Oct. 1 liability deadline encouraged retailers to make the EMV switch. Far more consumers hold EMV cards now, yet the survey didn’t answer whether that means more are trying to avoid the stores that require them.

Credit.com has written on consumers’ frustration with stores that have poorly implemented EMV readers and on concerns with checkout delays caused by slow EMV point-of-sale terminals. But most consumers have embraced the technology and their main concern is that retailers haven’t adapted to the system, which is viewed as more secure.

Put simply, it sounds like retailers can’t win. Some consumers say they’ll avoid EMV stores, while others say they’re frustrated with stores that don’t use EMV. The EMV Migration Forum, an industry group, did not immediately return a request for comment.

Despite the potentially troubling existence of EMV avoiders, the survey did share some good news. Plenty of consumers — 34% of EMV cardholders — said they “appreciate stores that enable me to use my chip,” while 35% said that even though checkouts indeed took longer, they weren’t bothered by it.

There are mitigating factors to consider in the Mercator survey as well. As we’ve seen after major credit card hacks, consumers often say they’ll avoid shopping at certain stores due to payment concerns but still shop there anyway. So these responses don’t always translate to action.

Still, for consumers to even suggest they’d avoid a store sounds like a nightmare to retailers during the competitive holiday season. “I have a chip card and some of the smaller holiday stores are starting to implement it, and the cashiers aren’t too pleased with the situation at the holidays,” Augustine agreed. Too bad something so utterly simple is causing so much trouble for store owners.

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