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Credit card chip security on rise

by Indexcreditcards Indexcreditcards
Credit card chip security on rise

Credit cards with more secure processing chips, as opposed to the magnetic stripes common in the United States, have long been in use in Europe, Japan, Canada, China, Mexico and Brazil.

In a bid to catch up with other countries, Wells Fargo just announced that in a few months, it will pilot a program testing microchip-embedded credit cards with 15,000 of is customers who are considered to be frequent travelers, according to a New York Times report. The Visa SmartCards, a Wells Fargo product, will have the new chips plus the older magnetic stripe technology so the credit cards can be used both here and abroad.

JP Morgan Chase will also add microchips to its Palladium credit card, which is a card usually issued to customers known to travel abroad. These credit cards will also contain both an embedded encrypted chip and the magnetic stripe so domestic retailers can accept them.

Because the chip technology and the card readers needed for that technology have long been a credit card trend overseas, traveling Americans often have difficulty using credit cards at unattended payment sites like gas stations and ticket kiosks. Conversely, U.S. retailers don’t have card readers that can process the credit cards with the newer chips.

The newer chip and pin technology (entering a PIN number is also required for every transaction), also known as E.M.V., makes credit card use more secure in four primary ways:

  1. Making fraudulent use more difficult
  2. Preventing criminals from using credit cards because of the cards’ unique digital seal or signature
  3. Protecting cardholders in online payment transactions
  4. Storing more information than magnetic stripe credit cards

In other credit card news surrounding secure technology, Visa Canada has implemented multiple ways of preventing the skimming of contactless credit cards by fraudsters. Scotiabank now offers Visa payWave credit cards. These credit cards never leave the cardholder’s hand, but instead are tapped or waved in front of the credit card terminal. A tiny radio frequency identification antenna makes this no-contact credit card use possible.

Although some believe this data can be intercepted and used fraudulently, Visa Canada says these Visa cards generate codes that change with every transaction so stolen data is a very limited possibility. Visa also has a zero liability policy so their customers aren’t responsible for any fraudulent charges.

Back in the U.S., MasterCard recently announces its own five-year plan for implementing contactless and mobile phone payments, telling merchants that they will need to be equipped with contactless terminals by October 2012, according to a SmartCompany report.

Credit cards & lifestyle changes are moving right along.

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