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EMV Cards Can’t Be Skimmed Like Magstripe Cards

Feb. 3, 2015
Credit Card Basics, Credit Cards
Credit cards with EMV chips
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Credit card skimming has long been criminals’ go-to method for lifting sensitive information from cards that have account information embedded on a magnetic stripe, or magstripe. This illegal practice can lead to fraudulent charges and leaves victims highly susceptible to identity theft. Although the technology that most skimmers use is relatively basic — small, nearly undetectable devices attached to ATMs or gas pumps that copy a card’s information — card skimming continues to be a big problem.

Named after its developers — Europay, MasterCard and Visa — an EMV credit card has a small chip that goes a long way toward combating card skimming. Here’s a look at how these cards work, as well as why they should become more popular in the United States at the end of 2015.

The technology behind EMV cards

Take a quick glance at the back of a credit card, and you’ll probably see a thick black band. This is the card’s magnetic stripe. These bands are so vulnerable because the information that’s stored on them is unchanging, static data. If a skimmer manages to read the data off a card’s magnetic stripe, he or she can copy that information onto a counterfeit card and use it to make purchases.

Instead of a magnetic stripe, an EMV credit card is embedded with a small chip that encrypts your personal data. This chip generates a unique transaction code every time a new purchase is made. Instead of swiping the card, users place it into a card reader and provide a signature or PIN number. Because the card’s information changes after every transaction, data skimmed from it would be useless to a criminal. Certain EMV cards even work with near-field communication payment devices that allow users to simply tap their cards against payment terminals to make a purchase.

Merchants pushed to prepare for EMV

Although EMV cards are already widely used in Europe and offered by most major credit card issuers in the United States, merchants have been slow to make the necessary upgrades in their payment systems to accommodate them. That should change by October 1, when stores, restaurants and any other businesses that haven’t upgraded their systems to accept EMV cards will be held responsible for any fraudulent transactions made on their premises. This nudge should encourage more businesses to start accepting EMV cards.

» MORE: NerdWallet’s Best ‘EMV With Signature’ Credit Cards

The takeaway

With more than 1 billion EMV cards already in use around the world, it should only be a matter of time before more Americans benefit from the increased security provided by chip technology. Though EMV technology makes it nearly impossible for criminals to skim credit cards, it’s still important to safeguard your personal information and to practice vigilance whenever using an ATM in a densely populated area or at locations that are often targeted by identity thieves, such as gas stations.

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