Your EMV Chip-Enabled Card: What Are Its Advantages and Limits?

Aug 17, 2018

EMV cards

As recent reports from the payments industry reveal, EMV chip card technology has been highly effective in combating counterfeit fraud at point-of-sale transactions and ATMs. In fact, a 2018 Market Snapshot reveals a 70 percent decrease in this type of fraud among retailers with EMV-enabled terminals and a 41 percent reduction across all merchants. Although it’s undeniable that EMV cards offer stronger protection for cardholders, it’s also true that there are clear limits to the technology when it comes to the overall prevention of fraud. To help clear up any misconceptions that could compromise your account security, take a look at our Q & A on this topic:

What is an EMV chip? Just in case you’re unfamiliar with the technology, it refers to the square metal computer chip embedded on the front of your debit and credit cards. Named for Europay, MasterCard and Visa, the chip provides enhanced security for account and transaction data at EMV-enabled terminals or ATMs. To use the card properly at a retailer, you dip it into the terminal’s reader below the keypad, and then follow the prompts provided in order to complete your purchase.

How does it help safeguard my account? You may recall that prior to the widespread adoption of EMV-embedded chips, you would swipe your credit or debit card at a retailer’s register to make a purchase, as the magnetic strip on the card contained the necessary data for processing the transaction. But as The Motley Fool points out, the magnetic strip also contained all of the information fraudsters needed to replicate the card. As technology evolved, thieves gained easier access to those tools that could be used to intercept this sensitive data at a point-of-sale. As a solution, an embedded microchip was used to store account data and transmits transaction information using a unique method of encryption. Each time a card payment is processed at an EMV-enabled terminal, a code is generated and processed through the payment system. Once the code is used, it can’t be used again, rendering the information useless to thieves.

If I continue to swipe my card at the register, does my EMV chip protect my card data: No, it’s important to be aware that even though you may have a microchip on your credit or debit card, your account information is still contained in the magnetic strip of your card. If you use the swiping technique for a point-of-sale transaction, the microchip offers no added protections against your card data being obtained and used by a hacker for a counterfeit purpose. 

What else can’t the EMV chip do? The technology offers no protections for e-commerce, so be certain that you continue to take the usual precautions when making purchases on the internet. For a refresher on secure online shopping, check out safety basics from the National Cyber Security Alliance. As The Balance cautions, fraudsters may actually get better at deploying phishing techniques to goad you into revealing sensitive information online as they seek alternative ways to steal financial data.  In addition, it’s possible that a retailer’s payment systems used to store your credit card information could be breached and that your computer could become infected (e.g. with malware that records your keystrokes).

The Motley Fool also points out that gas stations are not mandated to use chip readers until October 2020, so stay alert to card skimming at the pump. And of course, your physical card can still be stolen. For these reasons, it remains crucial to monitor your accounts on a regular basis. If you suspect fraud or your SFPCU debit or credit card is stolen or lost, report this to SFPCU immediately.

Although EMV technology is not an all-encompassing solution for preventing fraud, it is a powerful tool for mitigating risks of counterfeit transactions. What’s more, it is only one of the many enhancements we are continually making to protect the privacy and security of your financial data, and prevent financial losses that could adversely affect our credit union, and by extension, the value and service we provide to our members.