Credit is about to get a whole lot better
The credit cards you use are about to become a thing of the past.
U.S. financial institutions, including Dupaco Community Credit Union, will begin offering "smart" credit cards to help combat card fraud.
While smart credit cards look similar to traditional magnetic-stripe cards, the replacements are much more secure – offering better protection against cloned card fraud and more peace of mind for consumers wary of a growing number of massive data breaches.
What it is
Smart cards are equipped with EMV technology, which is named for developers Europay, MasterCard and Visa.
Rather than relying on information programmed onto a card's magnetic stripe, smart cards essentially contain a small, secure computer with encrypted card information and other security features that make the card functionally impossible at this time to counterfeit, according to Todd Link, vice president of remote services at Dupaco.
"EMV cards will reduce the value of stolen card information, because it will significantly limit the way in which a criminal can use the stolen card data," Link said.
In the United Kingdom, where EMV cards are in active use, fraud rates are at a 10-year low, according to the report "EMV Essentials for U.S. Issuers and Merchants," sponsored by Shazam.
Smart cards are the same size as existing credit cards. But a small chip will be embedded on the card face.
With EMV-enabled cards, you will no longer "swipe" the card for payment.
Instead, you will insert the card into a chip reader, where the chip and the processing device can communicate. Some cards will allow "tap and go" technology. Designed for lower dollar transactions, this process allows you to simply bump your card against a contactless card reader at the merchant.
When it's coming
Dupaco, which is actively working on an EMV card release, will be among the earliest vendors in its processing network to issue smart cards. Dupaco expects to have smart cards in its members' hands by the end of the year.
"Dupaco understands the importance of card security to our members. As a result, we are working as quickly as possible to release our EMV VISA credit card," Link said. "The process takes quite a bit of time, as Dupaco will put the card through rigorous security and transactional testing before the card is released."
Each financial institution will be on its own schedule to transition to EMV-enabled credit cards. Beginning in October 2015, though, there will be a liability shift to merchants and financial institutions that are not using EMV technology, Link said.
"The EMV card coming in 2014 and 2015 will take an important step forward in card security," Link said. "And, over time, enhancements will no doubt be made to improve the technology, adjust to criminal behavior and utilize more enhanced security features being developed all of the time."
What you can do
Smart credit cards cannot stop someone from stealing your wallet or purse and potentially being successful in using your ID and credit card. And EMV cards cannot stop fraud when it comes to online purchases, where the merchant never sees the card or the buyer.
"Despite the best intentions of EMV smart card technology, they do not eliminate fraud," Link said. "The cards take a significant step forward but do not protect every type of transaction."
Card security requires active participation from the card issuers, the card networks (Visa/MasterCard), the merchants and the cardholders, Link said. Here are some simple things you can do to protect your card information:
- Avoid conducting online transactions that lack the "https" Internet address.
- Only purchase from merchants that you know and trust.
- Never share card information with callers.
- Be alert to how and where you use your card when traveling internationally.
- Do not loan your card to friends or family members.
- Review your card statement for any suspicious transactions, and report suspected fraud activity immediately.
- Ensure all home computers and Internet-enabled devices have proper up-to-date security software to protect against malware and other computer viruses designed to steal personal financial information.
By Emily Kittle