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EMV Chip Credit Cards In the United States

EMV Chip Credit Cards In the United States

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Credit card fraud is the most common form of identity theft and can happen in many ways. Most people think credit card fraud happens when someone steals or finds a misplaced card and uses it for unauthorized transactions. However, skimming is another common type of credit card fraud — a practice where scammers add devices to credit card terminals that capture cardholders' data when they swipe their cards, allowing thieves to create counterfeit cards.

The U.S. has the highest rate of credit card fraud, accounting for over a third (35%) of global cases in 2018. To combat skimming and other types of credit card fraud, American retailers and financial institutions have switched over to EMV, a secure technology that many other countries adopted decades ago. New rules — introduced by banks and payment processing networks in 2015 — have promoted the adoption of EMV technology in the U.S., as merchants without EMV chip readers are now liable for fraudulent transactions.

In this guide, we'll delve into EMV chip technology, how it works and what to know about fraudulent transactions.

What is EMV technology?

"EMV" — which stands for "Europay, MasterCard and Visa" — is a global credit card technology managed by American Express, Discover, JCB, Mastercard, UnionPay and Visa, designed to combat fraud and counterfeit transactions.

EMV cards are often referred to as "chip cards," since cards use smart chips to store a user's data.

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In recent years, EMV chip cards have overtaken magnetic stripe cards, comprising 83% of transactions worldwide.

The main difference between EMV cards and magnetic stripe cards is the way account information is stored. Magnetic stripe cards hold information in the stripe itself — the magnetic stripe needs to be swiped for the card reader to process this data. In contrast, EMV cards have microcomputer chips that create a unique encrypted code each time a card is inserted into a payment terminal, making it much more difficult to counterfeit.

Chip-and-signature vs. chip-and-PIN cards

An EMV card can either be a chip-and-signature or a chip-and-PIN card — or come with both capabilities. The card issuer determines which functionalities the credit card will come with. Both varieties come with the EMV chip and are both "dipped" into a card terminal rather than swiped. The differences lie in how the transaction is completed.

With a chip-and-signature card, customers must sign their name on the receipt. But with a chip-and-PIN card, customers must input a personal identification number (PIN) to finalize the transaction. (Debit cards are actually chip-and-PIN cards.)

Chip-and-signature cards
Chip-and-PIN cards
Provide a signature on the receiptInput your PIN on the card terminal

Less secure as merchants often do not confirm that your signature matches the one on the back of your card
More secure as it requires a PIN number to complete the transaction

Prominent in the U.S.
Prominent worldwide, so you may need to own an EMV chip + PIN card to pay at some merchants when traveling internationally

Chip-and-PIN cards are notably more secure, since the PIN provides an extra layer of security in case the card is lost or stolen. Across the globe, you'll find that chip-and-PIN cards are the standard; currently, though, this isn't the case in the U.S. Most merchants only require chip-and-signature cards, as they're much more convenient than entering a PIN at checkout.

However, payment processing companies like PayJunction predict that chip-and-signature cards will eventually be phased out for two reasons: First, chip-and-PIN cards offer enhanced security — and there are numbers to prove it. (For example, the U.K. has required chip-and-PIN cards since 2006 and has cited between 2004 and 2014 a reduction of over £80 million in credit card fraud.)

Second, chip-and-PIN cards are the standard globally — therefore, U.S. consumers may find that their cards with just chip-and-signature may not be accepted at certain merchants while abroad, such as automated payment machines that cannot collect signatures for transactional proof.

Contactless payments — what are they?

Contactless payments started rising with the coronavirus pandemic, as they eliminate touchpoints between the consumer and the retailer. This technology is known as Near Field Communication (NFC), allowing EMV chip cards to make contactless transactions. Most EMV chip readers are already NFC-capable, meaning that businesses do not have to purchase this technology separately to allow for contactless payments.

Thankfully, contactless payments are also quite secure, as you'll need to enter a passcode or use a fingerprint scan on your phone to trigger the payment.

Best EMV chip credit cards for travel

Virtually all cards in the U.S. come equipped with an EMV chip. Therefore, you'll want to own a card that offers other travel benefits and top-notch security features.

As mentioned earlier, your card will likely only support chip-and-signature at this time. At this time, Bank of America and Barclays are the only major U.S. issuers that offer chip-and-PIN capabilities on their commercial cards. Since the PIN is optional, you'll have to activate it through your card issuer before you travel. Still, chip-and-signature is the preferred method on Bank of America and Barclays cards, and the POS system will only ask for your PIN if required.

In countries where chip-and-PIN is the norm, you should still be able to use your chip-and-signature card with no problem. The only scenarios where your chip-and-signature card may not be accepted is at automated payment machines, which will require a PIN to complete your transaction. In this case, it's best to pay with a debit card or with cash instead.

Below, we've answered the most frequently asked questions about chip credit cards.

What is an EMV chip card?

An EMV chip card is a payment card that comes with a microchip, which must be inserted into the card reader. It's more secure than magnetic swipe cards, since the chip on the card creates a unique code each time the card is used.

How do EMV chip cards work?

A card reader reads the information on the chip in the card, which creates a unique, single-use code for each transaction.

What information is stored on a credit card chip?

The microchip contains the information required to authenticate and process any transactions. However, there is no account information on the credit card chip.

Do you need a chip credit card in Europe?

Yes. Over 90% of transactions in Europe are chip card transactions, so it's essential to bring a card with an EMV chip when traveling to Europe.

How are credit card chips more secure?

Credit card chips are more secure for multiple reasons: First, an EMV chip doesn't contain personal information like magnetic stripes on cards do. Each time the card is used, the chip develops a unique code for that transaction only. Next, the card will either require a signature or PIN to complete the transaction, so unauthorized users will be unable to use your card.

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