Are Credit Card Chips Secure?

The credit card chip might seem like a nuisance — a payment method that not only takes much longer, but often doesn’t even work on the first try. If you’re like most people, you’ll attempt the chip reader once and then default to the less-secure swipe just to get out of the checkout lane.

When card chips were initially introduced, Americans were told that what they sacrifice in convenience they will make up for in added security. After all, credit card fraud has doubled in the past seven years, and something had to be done. But, two years into the mass adoption of the added security measure of the chip, many of us are left wondering: are these credit card chips really more secure?

What are credit card chips?

Chips — officially known as Europay, Mastercard, Visa, or EMV — have become a global standard security measure meant to contend with the rising frequency of security breaches and credit card fraud.

Magnetic strips are susceptible to fraud because they transmit static data for every transaction — one magstripe delivers one set of information. Chips, on the other hand, create new transactional data with every purchase, which is far less susceptible to counterfeit. For example, if an identity thief used a credit card skimmer and obtained your magstripe info, the card would be compromised; however, if they stole your chip data, that info is only applicable for one transaction and therefore no longer sensitive or even relevant for future purchases.

According to Visa, chip-enabled merchants have seen a 66 percent reduction in credit card fraud since the adoption of the EMV. So, that means card fraud is a thing of the past, right? Unfortunately no — EMV is not a fix-all, and cunning identity thieves still find ways to access your sensitive information despite mounting security protocols.

Credit card fraud isn’t going anywhere

The EMV initiative cost American retailers around $25 billion to upgrade terminal hardware and update software. With a price tag of that magnitude you would expect chip technology to be flawless — but it’s not.

Various security lapses continue to put consumer information at risk despite EMV technology. For example, retailers must pay extra, and opt-in, for default encryption on transactions for many terminals made by major manufacturers. This means that consumers that pay at an unencrypted terminal unknowingly take on added risk of identity theft. Not to mention, hackers continue to adapt to evolving consumer-protection standards and still find security loopholes regularly. However, the greatest threat to consumer identities is far less granular, and goes beyond individual transactions.

EMV does not protect against one of the most prevalent causes of identity theft in the country: data breaches. There were more data breaches in 2017 than any year in history, and over 170 million American records were exposed. While EMV might protect against certain kinds of fraud, data breaches remain a prominent threat.

How to protect your identity

Your FICO score is a record of your borrowing history, and if this record is sullied with illegitimate items it can take years to get finances back on track. The best way to fend off identity theft is to monitor your credit report and look for unusual activity such as unfamiliar inquiries or new accounts. If you see an unfamiliar change in your score then you might be a victim of identity theft.

Chip or no chip, consumers must be proactive and be on the lookout for identity thieves on their credit reports. Be one step ahead of thieves, check your credit regularly, and enlist the help of a professional credit repair service.

CreditRepair.com offers a free personalized credit consultation and audit of all of your credit accounts. With access to industry-leading repair services, CreditRepair.com members typically see a 40-point score improvement in the first four months of their subscription.

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