Are Pin and Chip Cards in Our Near Future?

A “Chip-and-Pin” card is also known as Europay, MasterCard and Visa.  The card was named after the developers of the card, hence it is called EMV.  The card includes a microprocessor chip that encrypts transactions differently for each purchase.  This makes it difficult for thieves to duplicate. To make a purchase requires both your card and a PIN number.

MasterCard and Visa’s push

Both MasterCard and Visa are trying to encourage upgrades to accept the cards. MasterCard is trying to convince ATM owners to upgrade their machines by April 2013. Visa will require U.S. acquirer processors and sub-processor service providers to support merchant acceptance of chip transactions by April 1, 2013.

Here are the advantages and disadvantages of the Chip-and-Pin card compared to the traditional magnetic strip card.

Advantages

Chip-and-Pin card helps prevent fraud at the Point of Sale (POS).

It is accepted in 130 countries worldwide.

It is more secure because it requires both a PIN number and a card to complete transaction.

The transaction data changes every time it is used, so can’t be duplicated by thieves.

Disadvantages

Chip-and-Pin card conversion is expensive for merchants.

It costs card issuers ten times as much as a magnetic strip card to produce and distribute.

Consumers have to remember their PIN number.

It does not eliminate on-line fraud that does not require the card to be present.

Offered by some credit issuers

Some card issuers have already issued the Chip-and-Pin card to customers who travel abroad frequently.  The list includes American Express, Citi Bank, Chase, Wells Fargo and Bank of America.  The card includes both the chip and magnetic strip, so the card can be used in the U.S. and abroad.

Adoption is slow because of the cost to merchants and most consumers haven’t demanded this card.  Those most aware are travel internationally and have had difficulty using their credit cards for purchases or getting cash at ATMs abroad.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Getting Credit, Identity Theft, Money & Identity

This post was written by John Ulzheimer