Special to the Financial Independence Hub
For years, we got used to swipe, type and go. Then, all of a sudden, we were forced to insert our cards and wait, like we’ve been thrown back to the Stone Age. Well, you will be pleased to know that it was not a step backward. This is real progress for the protection of the cardholder.
What makes the chip so different?
The difference between the chip and the magnetic strip is bigger than just your experience when you check out. When you swipe your card at the terminal, your personal information is vulnerable. We have seen this numerous times in major department stores over the years. All it takes is one good hacker, and all of the information on every card ever swiped within that database is up for grabs.
Yes, that means identity theft.
With the new chip, all of that information is encrypted before it is processed. What does that mean? In a nut shell, your information is transmitted as a one-time-use code. No more hanging your personal info out there for someone to grab a hold of. This doesn’t mean the codes are unbreakable, just that it takes a whole lot more to crack them.
In addition to that, the chip can’t be counterfeited. That magnetic strip on the back of your card, which you’ve been swiping forever, can easily be duplicated. If someone gets their hands on your card, that one strip could quickly turn into hundreds. If you have a chip card stolen, the culprit must have your personal identification number (PIN) in order to use it. And because it can’t be copied, there will only be one bad guy to track down.
When did the chip come into play?
The United States just adopted the more secure way to pay in 2015. But, believe it or not, the chip card has been around since 1994. Fraud was a huge problem in Europe, so they decided to change the way they make transactions by using this seemingly new technology. Since they made the change, Europeans have saved millions that would have been lost to fraud and counterfeiting. Slowly but surely, the rest of the world is following suit.
Why do I have to use them?