Have you got those old magnetic stripe credit cards which are swiped at the point of sale terminals? Then, we are sure some of your cards have stopped working because the stripe on the card has worn out. How much ever you swipe the transaction it won’t go through, because the machine will be unable to read your card.
All your information is stored in the part where the swipe happens. That is precisely the reason why you need a chip credit card. These cards are inserted into the point of sale machine and the machine reads the card. Chip cards are secure and come with a PIN. Want to know more? Read on.
What is it?
Chip cards could be either credit or debit cards and have a microchip embedded in them. Have you seen that small, golden metallic square portion in some cards? That is the chip on the card. All your details such as card number and your name are stored on the chip. This chip isn’t easily readable. This chip is well encrypted to secure your personal details.
How is it secure?
Every time you swipe your chip card, it creates a unique code for the transaction. Even if this code is copied by hackers, they cannot use it for another transaction. They will need chip card to create a code for the next transaction. What happens in case of stripe cards? Once the information from your stripe card is copied, it can be used multiple times at the other point of sale terminals. Now, you know why chip cards are better. Unlike stripe cards, chip cards have to be inserted into a point of sale machine to be used for a transaction.
Why stripe cards that are swiped not great? Magnetic stripe cards were introduced way back in the 1960s. In all these years, fraudsters have mastered how to steal information from a magnetic stripe card. The hacker just needs a single swipe to get all your information. Also, portable magnetic card readers can be used to read information on magnetic stripe cards. These card readers are useless when it comes to a chip card. So, a chip card is dipped and not swiped. When a chip card is dipped, information is passed on to the bank from the card and the card is verified. Then, a unique code is created for the transaction.
The unique code for transactions cannot be created without the chip card. There is no such unique code for your magnetic stripe card. So, when that information is stolen from the stripe card, it can be reused elsewhere. Even if a hacker steals information from the chip card, it will be useless. The information cannot be reused elsewhere. The unique code created by the card can be used more than once. Every time chip card is dipped for a transaction, a code will be created for that transaction.
Given the safety provided by chip cards, our central bank, the Reserve Bank of India (RBI) has asked all banks to issue chip cards going forward. Is this new? No, the world has already shifted to using chip cards. Countries including the United States are now using chip cards. What about Europe? 80% of the cards used here are chip cards. Has it been effective? Of course! Data shows that losses due to card frauds in Europe dropped to 47 billion euros in 2014 from over 170 billion euros after people started using chip cards.
The card information cannot be reused but the card can be stolen. What will happen if the card is stolen? Don’t worry! All chip cards now come with a PIN to secure it. Just like you get a PIN for your ATM debit card, you will have a PIN for your chip credit or debit card too.
Another thing that is similar to your ATM debit card is that if you enter the wrong PIN thrice your card will get blocked. So, even if your card is stolen, the thief cannot use it without your PIN. So, never share your PIN number or write it down anywhere on the card.
If you are still using a magnetic stripe card, consider getting a chip card. You can ask your bank to give you a chip card whenever you opt for a new credit or debit card too. You can be assured that your transactions will remain secure the next time you shop using your chip card.