The days of the credit card’s magnetic stripe appear numbered, with special-chip, or EMV, credit cards poised to immigrate onto America’s payments landscape.
In Costa Rica the BAC San José is the first to use the chip on their cards, several banks in the country will start using the chip later this year.
MasterCard explained that in the case of Costa Rica, at least two entities are migrating to this technology.
EMV-enabled cards, named for developers Europay, MasterCard and Visa, have an embedded microprocessor chip that encrypts transaction data differently for each purchase. Some chip cards require a personal identification number to complete a transaction, while others only require a signature. EMV is widely used in Europe and Asia and is steadily being adopted as the standard type of credit card worldwide.
EMV: Better security than the mag stripe? Proponents of smart cards brag about the security EMV cards offer versus the traditional swipe-the-stripe cards. Because the transaction information is encoded uniquely every time, it’s harder for criminals to pick up useful payment data pieces and use them again for another purchase, says Randy Vanderhoof, executive director of the Smart Card Alliance, a nonprofit with a mission of advocating smart card technology.
Compare that with magnetic stripes that contain what Vanderhoof calls “static” data, or payment information that never changes. All thieves have to do is lift that information and create a fake card before going on a shopping spree.
EMV cards nearly eliminate skimming scams, says George Peabody, director of emerging technologies advisory service at Mercator Advisory Group. So no more worrying about a server taking liberties with your credit card after a meal, like the Mugs ‘N Jugs waitress in Florida who was arrested on charges of skimming the credit cards of bad tippers.
In the United Kingdom and Ireland the have branded the EMV smart card “Chip and PIN”, the word “chip” refers to a computer chip embedded in the smartcard; the word PIN refers to a personal identification number that must be supplied by the customer.
Developed well over 15 years ago, one market that resisted the use of the EMV is the United States. However that is changing with the announcement by MasterCard that it’s finally pushing the EMV system across its U.S. By the end of this month (April 2013), MasterCard is saying it’ll have, in the U.S., replaced its existing magnetic strip infrastructure with one compatible with the chip-based technology, where every credit card has a small silicon chip embedded in it.
So who knows? Your next credit card really may be your last, but before the plastic goes it’ll turn digital…and then disappear entirely into the digital ether (with Apple perhaps involved, if Visa doesn’t seal the iPhone NFC deal first).
