What You Should Know Before Making Use of a EMV Chip Credit Card

Close up of credit card security chip

© Nicholas Rigg / Photographer's Choice RF / Getty

The U.S. credit card industry is moving to a more secure type of credit card - the EMV credit card, also called chip-and-PIN or chip-and-signature credit cards.

You may have already received a new card in the mail that looks like your old card but has a metal square on the front above the card number (what you see is really a protective overlay for the chip). 

What Is an EMV Credit Card and Why Does It Have a Chip?

The EMV chip credit card - named for Europay, MasterCard, and Visa, the companies who created the standard – is a safer type of credit card. Similar to the magnetic strip on your old credit cards, the chip on the EMV credit card holds your credit card information and transmits the information to payment processors in a way that's tougher for criminals to hack and use.

The chip technology will change the way you use your credit card in many face-to-face transactions, but everything else remains the same.

How to Use Your EMV Credit Card

When you’re making a purchase with an EMV credit card at an EMV-enabled terminal or card reader, there’s a slot below the numeric keypad where you “dip” your credit card. Place your credit card into the slot and follow the prompts on the screen. You must leave your card there until the transaction has processed; it’s not a swipe-and-go motion like with the magnetic strip. 

Checking out may take a little longer than you're used to, especially as cardholders and cashiers get used to the new process. The transaction also takes slightly longer to process versus swiping your credit card for transactions.

Not all merchants will have EMV enabled, even if they have the terminal installed. If you’re at a terminal that is not EMV-enabled, whether you have an EMV credit card or not, you'll swipe your card in one quick motion to complete the transaction.

Online purchases have the same process, even with EMV-chip credit cards. You'll still enter your credit card number, expiration date, security code, and billing address.

EMV Cards Don't Currently Require a PIN

A chip-and-PIN version of the EMV card has been used for years in other countries. These cards use chip technology and require the cardholder to enter a PIN for your credit card transactions, similar to what you do when you use your debit card as "debit."

The U.S. credit card industry is moving to chip-and-signature, meaning you'll sign for your credit card purchases just as you always have. The industry may adopt chip-and-PIN for credit cards sometime in the future. With debit cards, you'll have the option to enter your PIN or to compete as a "credit" transaction by skipping the PIN and signing your receipt.

If your card is also contactless, you'll see a contactless symbol on the front of the card. You can simply tap your credit card on the credit card reader to complete your transaction.

What Makes EMV Cards Safer to Use

Reducing credit card fraud and shifting more liability to merchants are two of the major reasons for the switch to EMV credit cards. They are safer than the traditional credit cards that only held information on the magnetic strip.

EMV credit cards contain a small computer chip that creates a unique code for each transaction and sends that code through the credit card processing system to authorize the transaction. After the code has been used, it can’t be used again. So, if a hacker gets access to this code and attempts to use the data for credit card purchases, the transaction would be declined since the code has already been used.

Chip technology makes it virtually impossible for criminals to create counterfeit cards with your credit card information, assuming you always use EMV at checkout.

Why Credit Card Fraud Is Still Possible With EMV Cards

While chip technology is expected to reduce credit card fraud in the long-term, there’s still a risk of fraud in the short-term. Not all retailers are ready to process EMV chip credit cards. So, you’ll still have to swipe your card at some places, even if your card is equipped with a chip. Swiped credit card purchases still carry the same risk of fraud. Plus, thieves can still use physically stolen credit cards.

Gas stations aren’t required to adopt the technology until October 2020. (The original deadline was October 2017.) Gas stations have been favored by credit card hackers because it's easier to install credit card skimmers. Fraud at gas stations may increase in the next couple of years.

Online transactions still carry the same risk of fraud. Hackers may get better at phishing – tricking you into giving up your credit card information by disguising themselves as a business or person you know and trust. They may breach businesses where you’ve stored your credit card number for one-click shopping or recurring subscriptions. Continue to practice safe habits when you're shopping online.

Why You May Not Have Received an EMV Card Yet

The credit card industry set an October 1, 2015 deadline for the switch to EMV cards, but not all credit card issuers have mailed new cards to their cardholders. You can keep using your old card as normal until your new one arrives. Once you receive a new card, destroy the old one.

If you haven’t received a new card, it’s probably because your card issuer hasn’t mailed one to you yet. It's possible that your credit card issuer isn't offering EMV cards at all or not offering EMV technology for your card. The EMV Migration Forum has a list of all U.S. credit card issuers with EMV credit cards available. Contact your card's customer service if you have questions about the timeline to receive an EMV card for your account.

Not All Merchants Have Currently EMV Card Equipment

Most large retailers have already replaced their credit card terminals to accept EMV credit cards, partly because they have the resources to do so. Also, larger retailers stand to lose a lot of money if credit card fraud happens and they're not EMV compliant.

As of October 1, 2015, retailers with the old credit card processing technology may be liable for credit card fraud losses when a cardholder has an EMV enabled credit card, but the retailer does not have the equipment to process the transaction.

Smaller business owners who are unaware of the risks and costs of fraud may be slower to adopt the new technology. They may not deem the increased protection necessary because of their low volume of transactions or nature of their businesses. Unfortunately, failing to adopt EMV could be disastrous for some small businesses as credit card thieves may shift focus to businesses that aren't EMV-ready. A data breach could put a small retailer completely out of business.

What You Should Do If You Suspect Fraudulent Use of Your EMV Card

All the same credit card fraud protections still apply to consumers. Credit card processing networks, credit card issuers, merchants, and merchant banks will sort out which of them has to absorb the cost of fraudulent credit card transactions.

While the credit card industry has imposed “liability shift” rules for fraudulent transactions, this shift should be seamless for credit cardholders. Cardholders aren't liable for fraudulent purchases made while their credit card is in their possession and face only a maximum of $50 liability on purchases made with a lost or stolen credit card.

If you suspect fraud on your account, call your credit card issuer using the number on the back of your credit card, and they will let you know how to proceed.