Closer to the Future: A Comprehensive Introduction to Chip Card Technology
One of the main goals of modern technology is to ensure safety. This motivation led to the creation of cards. Cards are known as small vessels of information.
For these cards to work, they must have embedded chips. Despite their small size, they can carry a lot of memory for necessary use. Thus, they are given the name “Chip cards”.
Chip card technology is sometimes called EMV (Europay, Mastercard, and Visa) or Chip-and-PIN. It is a safe method for storing and exchanging confidential account data between customers and merchants. The chip encrypts the information during transactions, increasing data security.
Did chip card technology peak your interest? This article will guide you if you want to dive deeper into it!
Introduction to Chip Card Technology
In 1996, the alarming number of stolen credit card users led to many losses. This phenomenon paved the way for the creation of EMV. Furthermore, the other goal it has in mind is to prevent fraud prevention in payments and avoid compromised transactions.
An organization called EMVCo is responsible for EMV technology. Several major credit card companies belong to this corporation. They are Mastercard, American Express, JCB, Visa, UnionPay, and Discover.
Chip card technology simply works by embedding circuit chips into chip cards (payment cards or smart cards). The small microprocessor chip present in it enhances security since it possesses encrypted data.
This feature makes card duplication difficult to push through. The codes it holds are complex and eligible for one-time use only. This dynamic authentication ensures that your data is protected from being compromised.
What’s good about this is that hackers won’t be able to process future transactions despite hacking the code. Since no two codes are ever the same, it is impossible for card duplication to happen.
EMV technology is more successful in minimizing card-related fraud than traditional magnetic stripe technology. Because of this fact, they are now used as the card security standard internationally.
How Chip Cards Work
If you think you are not familiar with EMV, think twice. You might be unaware of your card purchases using EMV technology. It happens when you pay by inserting your debit or credit card rather than swiping it.
Chip cards are otherwise known as Chip-and-PIN cards, smart cards, chip-and-signature cards, and EMV. EMV means Europay, Mastercard, or Visa. It refers to the brainchild organizations of chip card technology.
EMV chip cards have a small computer chip ingrained into them. Unlike traditional card types, it doesn’t rely on a magnetic stripe. Yet, you can still observe them having this feature. However, the chip is responsible for transmitting the payment data to card readers during transactions.
Chip cards mainly have two types, and we will discuss them below.
One of the authentication processes of this type of card is the cardholder’s signature. During a transaction, a signature will verify the owner’s identity.
As compared to the chip-and-signature, this card type is more secure. This is because it requires cardholders to create their PIN. Every time they transact, chip-and-pin systems only ask you to enter the PIN. Without the presence of it, the transaction process will be a failure.
The trend for contactless payment has grown popular these days. This is the reason for the rapid evolution of payment cards. For EMV cards to join the bandwagon, they also have contactless payment innovations that utilize NFC (Near-field communication) technology. Cardholders can now tap their cards instead of dipping.
Whatever type of EMV card you choose, rest assured that you are safe. This is because both payment card standards have encryption and high-security features.
Key Components of a Chip Card
Now that we know how chip cards work let’s discuss their key components.
1. Microprocessor Chip
The most important part of the chip card is its microprocessor. It is a small computer that processes information. In addition to this, it is responsible for executing commands and generating transaction data.
The memory of chip cards varies depending on their purpose. It either has Read-only memory (ROM) or Random-access memory (RAM). ROM contains fixed information like card issuer’s details. RAM, on the other hand, is used for temporary data storage during transactions.
3. Antenna (for Contactless Cards)
Since contactless chip cards don’t need dipping into card readers, they need antennas to communicate. The antenna allows wireless communication with either NFC or RFID readers. This process works when the card is tapped or waved near the reader.
4. Contact Pads
Chip cards have metal contact pads on one side. This feature aims to establish an electrical connection with the card reader. Once the card is inserted into the terminal, the connection is established.
5. Magnetic Stripe (Optional)
Some chip cards may have a magnetic stripe. It is to establish compatibility with older card readers. The magnetic stripes contain the same info as the chip but in a less secure format.
Advantages of Chip Cards
1. Enhanced Security and Reduced Fraud
One of the primary advantages of chip cards is their cryptographic chip features. A unique code is generated by the chip for each transaction.
This secure transaction method makes it difficult for fraudsters to clone the card. This authentication process is more secure than magnetic stripes.
2. Global Acceptance
Chip card technology is a global standard of payment cards. It means that it is widely accepted in different countries. The global acceptance feature means that cardholders can use their chip cards internationally.
3. User Verification
One of the advanced card authentication chip cards is its PIN (Personal Identification Number) and signature requirement. Since cardholders are the only ones with knowledge about their PIN, the security of the card increases. It also makes it less prone to unauthorized transactions.
4. Compatibility with New Technologies
EMV technology allows chip cards to be compatible with new technologies. It includes digital transactions and mobile payment integrations. Their adaptability assures cardholders they can indulge in the latest advancements without compromise.
The evolution of chip card technology brought us closer to the future. It introduced a new era of secure and efficient payment transactions. The EMV technology helped people sleep soundly at night, knowing their finances are secured.
The next time you tap or insert your card, you’re not just making a payment. You are engaging in a technological invention designed to safeguard your financial well-being.