If you could read magnetic tape, you’d be a millionaire.
Well, or maybe you’d just have a million bucks worth of junk in your apartment.
The credit card is based on the magnetic stripe, and the way American credit cards work is almost as basic as you can imagine. In fact, the technology for our cards dates back to the 1980s, when the magnetic stripe really caught on.
Magnetic stripes hold your card information in digital form. When you swipe the card, the machine you run it through just reads that information off the stripe. It’s like digital braille.
Why magnetic stripes are bad news
If it wasn’t clear from the outset, having a little card in your pocket with all your information on it – and that includes your name, your account number, and perhaps your PIN – is not the best system. You would never keep a piece of paper in your wallet with that info, but your credit card is almost as easy to read as a piece of paper.
So when Target’s point of sale (POS) terminals were breached in 2013, hackers were able to steal all the information your card handed over and send it off to be sold on the black market – or whatever they decided to do with it. Instead of holding onto all your information in raw form, wouldn’t it be better to try and, you know, protect it?
Enter EMV chip technology
EMV chips – named for Eurocard, MasterCard, and Visa – are an attempt to make your information more secure. The little chip sits in your credit card and holds onto your data in an encrypted manner. That means that you can’t just strip the information off like you can with a magnetic stripe.
So how can the POS figure out what’s going on without giving hackers access? The chip is actually a microchip, which means the card itself can do things. Your magnetic stripe card can’t do bupkis.
Instead of handing over your account details in the raw, your new EMV chipped card will hand over details only once they’ve been encrypted. The POS will make a request of the card, the card will process the request and encrypt the response, and only then will the POS receive the data it needs. Personal data can then be sent off without any fear of theft.
Imagine it this way – right now, when I make a purchase, I effectively put all my details on a piece of paper, stuff it in an envelope, and mail it off. If someone grabs the envelope out of the mail, they’ll know everything about me. With EMV, I take the same piece of paper, run it through a blender, and then mail it to the only place in the world that can unscramble paper from a blender. I don’t care if hackers see it, because to them, it’s gibberish.
When can you expect to see EMV in your neighborhood?
The big card companies have all decided that October 2015 is going to be the cutoff for companies adopting new technology. Consumers will gradually be issued new cards, with most banks issuing EMV cards as old cards expire.
For merchants, though, October is starting to look more like a hard and fast date. In October, the liability for processing a stolen or fraudulent card will shift if merchants don’t have the newest technology in place. Luckily, you have plenty of time to make the swap. Good luck!
Header by Abby Kahler
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