High Security Credit Cards: What You Need to Know

By: Nicole Young | Views: 1576 | Date: 08-Aug-2011

The 1.7 billion credit cards we use in the US have magnetic stripe technology, which is relatively easy to clone, allowing thieves to commit credit card fraud. But the newer “chip and PIN” cards, also known as EMV cards, are far more secure.

With the common occurrence of credit card fraud and identitytheft, credit card security has become a hot topic. Did you know that highsecurity cards using chips and PINs have been in use in Europefor a while now? They've also been used in many countries in Asia and SouthAmerican, and Canadais converting to the chip and PIN technology that these cards use. Furthermore,did you know they're ontheir way to America? Following is everything you need to know about highsecurity credit cards.


The most common type of credit card in the United Statesuses magnetic stripe technology, which is, unfortunately, relatively simple toclone. This leads to increased recurrence of credit card fraud. However, chipand PIN cards, also known as EMV (Europay, Mastercard, and Visa) cards or highsecurity cards, are much more secure.


Finance companies Wells Fargo and JP Morgan Chase areworking hard to bring chip and PIN technology to the States, which shouldsignificantly decrease credit card fraud. The initial launch of high securitycards will begin with approximately 15,000 of Wells Fargo's frequent travelercustomers and select JP Morgan Chase customers later this summer.


This is a solution for frequent travelers, as it'simpossible to use magnetic stripe credit cards with many merchants in thosecountries that have instilled the chip and PIN technology. (While it is truethat American cards issued by Visa, American Express, and Mastercard arerequired to be accepted internationally, it can be frustrating to find someonethat can process magnetic swipe credit cards.) Magnetic swipe cards willcontinue to be more and more inaccessible overseas, which is why this kind oftransition in the United States is important. Furthermore, it's a wayfor Americato give the technology a try and see how it affects the rate of credit cardfraud.


But what is a high security credit card, and how does it work?


With magnetic stripe credit cards, the merchant must trustthat the person using the card is the actual cardholder. In turn, cardholdersmust trust the merchants to not use their credit card information in afraudulent way. However, with chip and PIN cards, face-to-face credit cardfraud will decrease dramatically. Instead of signing your John Hancock to areceipt or electronic signature box, the chip in your high security credit cardis scanned, and you are required to enter a PIN, just like you would at an ATMor with debit card purchases.


At first, chip and PIN technology may seem a bitoverwhelming or difficult to understand, but as you can see, it's quite simple.Magnetic stripes require a signature and nothing more, which chip and PIN cardsrequire the cardholder to enter the correct PIN. It doesn't get any simpler—ormore secure (at this point in time, anyway)—than that!


Katrina Robinson is a freelance writer and editor who coversa wide variety of finance topics including the best 0 APRcredit cards, balancetransfers cards, and reward creditcard offers.

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