[Nfbmo] FW: [NUT] FAQ: What you need to know about chip-embedded credit cards

Thu Aug 13 00:36:37 UTC 2015

From: nutkc at yahoogroups.com [mailto:nutkc at yahoogroups.com] 
Sent: Wednesday, August 12, 2015 6:53 AM
To: Nutkc
Subject: [NUT] FAQ: What you need to know about chip-embedded credit cards

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FAQ: What you need to know about chip-embedded credit cards
emv chip and pin
A credit card with EMV (for Europay, MasterCard and Visa) chip security. 
Credit: Shutterstock
Facing an Oct. 1 deadline, many U.S. merchants are taking steps to 
prepare for new, more secure, credit and debit cards.
Computerworld | Aug 12, 2015 3:43 AM PT
Banks have been sending millions of Americans credit and debit cards 
equipped with computer chips to improve the security of in-store purchases.
Meanwhile, banks and credit card companies are pushing merchants to 
upgrade their payment terminals so they can read the chips on the cards 
and bring the U.S. in line with credit card security used in much of the 
rest of the world.
The conversion process from older magnetic stripe cards to chip cards 
has sped up in recent months because of an Oct. 1 deadline. That's the 
day when liability for credit card fraud will shift from banks to 
merchants or the party using the least-secure technology. Credit card 
users, who won't bear liability for fraud, are unlikely to notice the 
deadline at all.
However, card users might want to know what's happening so they'll be 
ready when lines form at checkout lanes this holiday shopping season 
because merchants will have begun deploying chip-card readers. Some 
industry analysts say chaos will ensue because chip cards take a few 
seconds longer to read than magnetic stripe cards, and some customers 
and store clerks will be unfamiliar with how to use them.
The following is information you can share with other shoppers (after 
Oct. 1) if you happen to be (patiently) waiting in line at the checkout 
counter.
Chip card image
EMV-connection.com
Chip cards contain an embedded computer chip that is read by stores' 
point-of-sale terminals to enhance security.
What's a chip card?
A chip card, also called a smart card, is a credit or debit card with a 
computer chip embedded in the face of the card. That's the only 
difference in its appearance. Nearly all of the chip cards that banks 
are sending their customers still have magnetic stripes that will be 
used by stores that don't have chip-card readers. Magnetic stripe 
technology is decades old and is still widely used in the U.S. even 
though it is relatively easy to hack.
According to industry estimates, about half of the 12 million card 
readers at payment terminals in the U.S. will be converted to support 
chip cards by the end of 2015. Meanwhile, there are about 1.2 billion 
debit and credit cards in circulation among the 335 million people who 
live in the U.S. Eight major banks account for half of the U.S. card 
volume; they estimate that nearly two-thirds of their cards will be 
reissued as chip cards by the end of the year.
There are 3.4 billion chip cards in use worldwide, primarily in 80 
countries, according to the EMV Connection website. EMV stands for 
Europay, MasterCard and Visa, the companies that originally developed 
chip cards.
The numbers are important because there won't be a complete conversion 
to chip cards for many years. It took Canada about eight years to reach 
90% conversion to chip cards. Major retailers like Wal-Mart have been 
converting payment terminals to support chip cards for years.
How do I use a chip card?
GoChipCard.com, a website supported by major banks and credit card 
companies, posted a three-step illustration for how to use a chip card. 
Step 1 is to insert the card at the bottom of the terminal, with the 
chip toward the terminal facing up. That's instead of swiping the 
magnetic stripe along the side of the machine.
Many new terminals will support both methods, as well as NFC payments 
via smartphones and smartwatches such as the latest iPhones or the Apple 
Watch, which use Apple Pay. NFC payments are usually done by just 
touching, or nearly touching, a device to a payment terminal and 
entering a confirmation on the phone. In addition to “touch and pay” 
with a smartphone, some retailers like Rite-Aid will support the ability 
to touch the terminal with a chip card to pay.
123 chip screenshot
GoChipCard.com
Credit card companies have posted this graphic on GoChipCard.com to 
describe how to use a chip card.
As the GoChipCard graphic notes, a key detail of the first step is that 
users should not remove the card from the reader "until prompted." 
Analysts have noted that, on the first few tries, U.S. shoppers who are 
accustomed to swiping magnetic stripes may be likely to remove their 
chip cards quickly. Sales clerks will have to be ready for this -- and 
patient enough to remind users to leave the cards in place until the 
terminal beeps or a light goes on, or until the clerk gives the customer 
the thumbs up. There are more than 20 vendors of payment terminals, and 
they have varying methods for confirming that a sale is complete and 
that a card can be removed.
There are a wide variety of chip card payment terminals, but they mostly 
look alike, as indicated in the GoChipCard.com illustration. Some will 
be attached to a pedestal, just as older magnetic-stripe card readers 
are today. The terminals will almost all have a keypad to capture a PIN 
(personal identification number) and a screen and a digital pen to 
capture a signatures.
Step 2 in the graphic is to "provide your signature or PIN as prompted 
by the terminal." Many retailers won't require either, especially if the 
transaction is for a small amount, usually under $25. There's 
disagreement in the industry about whether a signature or a PIN will be 
required for larger purchases, but the decision will be made by the 
banks issuing the cards. (More on that below.)
Step 3 is to remove your card when the transaction is complete. As 
mentioned above, different terminals may have different ways to indicate 
that it's OK to remove the card.
Are chip cards really more secure, and are they necessary?
Yes. Chip cards are light years ahead of magnetic stripe cards in terms 
of security. The main thing to know is that the chip in the card is 
communicating with the network behind the terminal to enhance security 
instead of just forwarding your card number and related data to the 
network, as with the magnetic stripe approach.
The chip can communicate a unique encrypted token (or an alias) with the 
network instead of your actual credit card number. That way, the 
network, and even the store, won't know your card number. When the token 
reaches your bank, it is decrypted so the bank can verify your account 
and then authorize payment. This all happens in a few seconds or less.
As to whether the security is necessary, the answer is again, yes, 
especially for banks, but not necessarily for card users. Obviously, it 
is in everyone's interest to reduce fraud where possible, and banks have 
long said that customers aren't held liable for fraud. That policy of 
keeping customers harmless will continue with chip cards. Enhancing 
security helps banks reduce the cost of paying for stolen card numbers 
and stolen merchandise, which theoretically keeps costs in check for 
average bank customers. In countries where chip cards have been used for 
years, as in Europe and Canada, fraud rates have dropped dramatically.
So if the chip makes the card so secure, why do I need a PIN or a signature?
The main reason for a PIN or signature is to provide the merchant (and 
the bank behind the card) further evidence that the user of the card is 
the actual owner of the card. If your card is lost or stolen, even with 
a chip, it can still potentially be used by someone else.

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Posted by: Steven Clark <blindbites at gmail.com> 

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