How the new chip cards work for consumers


Have you seen the new credit cards and debit cards landing in your mailboxes like an avalanche?

These cards have a shiny computer chip in them that’s for chip-and-signature transactions. Retailers and restaurants are supposed to convert to new payment terminals to accept these cards over the next 3 weeks. Those that don’t convert will be on the hook for all fraud!

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How the new cards works for consumers

For us, this is how it plays: You go to checkout and at the terminal, you pop your card in a slot in the front instead of sliding it on the right. Your card goes in and sits for 10 to 20 seconds, then it says it’s approved, you sign for the transaction and finally it comes out and you’re done.

Sure, it’s inconvenient for consumers, but the benefit is that it will greatly reduce the amount of credit card fraud that happens. Going forward under the new system, criminals won’t easily be able to do these big breaches like the Target thing and steal people’s card numbers. Because the beauty of the chip is that it generates a unique transaction code each time.

Even if a crook gets your card info, it won’t do them any good because it is a one-time use code only! Perhaps one day crooks will figure out a way to crack this system too. But as for now, it’s much safer than what we previously had.

As for online shopping, there’s no change at all with the new chip-and-signature cards. Unfortunately, there’s no new security I know of that will make for less fraud with online purchasing.

So that’s what’s going on in the credit card world. But when it comes to debit cards with the embedded chip, those are being phased in more slowly. The reality is the banks don’t care much since a breach of your debit card hurts you more than it hurts them. The banks are more concerned with protecting bank money from being swiped via credit card fraud, so that explains the transition of credit cards ahead of debit cards!

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