New Smart Card Chip Technology
Smart cards and chip technology are coming to America…
In recent years, European and Asian banks have spent billions of dollars to switch to credit and debit cards that contain microprocessors which store encrypted customer information and require a PIN to use. With U.S. consumers charging $2 trillion on credit and debit cards linked to Visa, MasterCard, American Express and Discover, credit card companies are jumping on the same bandwagon to offer so called ‘smart cards’.
Most of the credit cards that American’s carry are cheaper to provide than the ‘smart cards’ and use a magnetic strip that is coded with their personal information – name and account number – which allows the merchant to quickly authorize a transaction. But the data on the magnetic strip is relatively easy to copy and steal.
In contrast, the new card technologies like MasterCard’s PayPass and American Express’ ExpressPay use chips and tiny radio antennas that allow consumers to pay by holding the card near a special reader at the cash register. Just like the European cards, the chip holds encrypted data that make it more difficult for thieves to use, if the card is lost or stolen.
“We’ll see the adoption of chip cards, but I don’t think the magstripe environment will be done away with soon,” said Visa senior vice president Brian Triplett. “For one thing, it would be hard to replace all 12 million cash-register devices that scan magnetic stripes in the U.S.” he said.
With 15 million new ‘smart cards’ issued in the U.S., only a small fraction of the more than 1 billion credit cards have been upgraded to the new technology. But if you’re looking for a new credit card and smart chips are an option, you might want to take advantage of the feature.
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