Learn the Benefits of Chip and Pin Technology

Chip-and-PIN credit card purchases are much safer than conventional purchases using a magnetic strip. When you make a transaction using your Chip-and-PIN credit card, a one-time code is generated and passed between the chip of your card and the point of sale terminal of the store.

Chip-and-PIN cards have a square-shaped microchip that produces and stores unique information for each transaction, unlike previous cards that used a magnetic stripe containing cardholder information. As such, chip-and-PIN cards are less vulnerable than previous credit card generations to fraud.

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Here’s everything you need to know about chip-and-PIN technology and how it can benefit you!

Learn the Benefits of Chip and Pin Technology
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An Overhaul in Card Payment Security

For credit card holders, credit card skimming remains a big concern. In 2013, 40 million credit card and debit card accounts were hacked, when US retailer Aim was the victim of a massive skimming attack. Once a fraudster has your credit card details, they can start racking up charges at your expense.

Although conventional magnetic stripe credit cards are readily cloned, it is almost impossible to duplicate Chip-and-PIN credit cards. Today’s point of sale (POS) systems have hardware that allows the computer to “read” the information in the chip, while a PIN offers an additional degree of authentication.

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This is a major improvement to a printed sales receipt of the purchase from older credit cards that used a magnetic strip paired with a signature.

How It Works

Chip-and-PIN cards overcome the need for workers to check that the signature matches the one displayed on the card. This is because the POS device can detect electronically if the customer has given a correct PIN.

Simultaneously, the embedded microchip decreases the risk of counterfeiting each time the card is used by generating unique transaction codes.

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Chip-and-PIN cards reduce the risk of credit card fraud. To use a stolen chip-and-PIN card, would-be thieves would need to know the PIN of the cardholder. This is complicated further by a cardholder quickly changing the card’s PIN after learning that their credit card has been misplaced or stolen.

Advantages of Using the Chip-and-PIN Credit Card

Learn the Benefits of Chip and Pin Technology

Chip-and-PIN credit card purchases are not only safer, but they’re also done in less time. You only have to type your PIN into the keypad of the point of sale terminal instead of signing for every credit card purchase.

You also don’t need to worry about a thief going on a shopping spree on your dime if your chip-and-PIN credit card is lost or stolen. Similar to your debit card, to allow transactions, your PIN must be entered each time.

However, protecting your credit card is still necessary, as fraudsters can swipe your credit card at retailers that do not yet have a chip-enabled point of sale terminals and can even make online transactions.

Disadvantages of Chip-and-PIN Credit Card

Some chip transactions can also be slowed down by the same thing that makes chip cards safer. Credit card chip readers typically need an added piece of software known as middleware to produce a unique code for each transaction.

Outside the credit card hardware, this middleware transfers transaction data between the terminal, the POS device, and the processor. This communication adds time to each transaction.

Another disadvantage is the rise of contactless payment options when shopping. This type of payment employs Near Field Communication or NFC technology which securely stores and transfers card information.

Many cards and POS systems allow cardholders to ‘tap’ their card to pay without having to input a PIN. This means anyone can make purchases by simply tapping your card. Though many card issuers have a limit on how much can be spent using NFC technology per day.

Conclusion

Credit card fraud is a multi-million dollar concern. It’s your duty as a credit cardholder to do everything possible to protect your information. The safety and security of Chip-and-PIN technology are provided by most distributors today.

Although Chip-and-PIN is a lot safer than swiping, it’s still necessary to be careful when using your card.