Technology has evolved at such a rapid rate that banks and credit card companies are constantly seeking new methods to stay ahead of those seeking to steal their customers’ financial information for criminal activities. The introduction of chip enabled credit and debit cards is a recent implementation designed to reduce fraud and make banking and transactions easier and more convenient.

The switch to chip enabled cards is taking place globally with these cards now being used in North America, Latin America, Australia, Africa, and the Middle East. A chip card which is sometimes referred to as a “smart card,” looks like a regular debit card or credit card except that it contains a tiny computer microchip embedded in the plastic. The microchip is a small computer processor with memory and software applications. The embedded microchip encrypts information, making it more difficult for unauthorized users to access the card’s information. The chip-enabled card can store information securely and has better security features than magnetic stripe cards.

When you use the chip enabled card, you swipe your card and sign to authorize your transaction. There are currently upgrades to payment terminals taking place where one will ‘dip’ the card into the terminal instead of swiping it. The chip card is inserted and left in the terminal for the entire transaction process. Cardholders will follow the instructions located on the terminal screen. For credit card transactions, one will enter a personal identification number instead of signing a sales receipt. You can use your chip card at any retail location or Automated Teller Machine (ATM). If the card reading terminal is chip-enabled, you will be prompted to enter your four-digit PIN. If you use your credit card at a retailer that does not have a chip-reading terminal, the magnetic stripe on your card will be swiped and you will have to sign a receipt.

Chip cards are much more convenient and quicker as one can just promptly swipe, sign, and go. When upgrades are made, one will be able to insert the card and go. Chip technology can also prevent a criminal from copying information. Unlike the magnetic stripe, a chip cannot be copied.

Over the next few years, point-of-sale terminals and bank machines will become equipped to accept debit and credit cards that contain chip technology. This means that it is essential that one remembers the PIN number. The shift to chip-enabled card technology is the most recent technological achievement designed to make transactions easier and faster while protecting the cardholder’s personal financial information.

Tested and widely used throughout the world, it is a proven method of a secure transaction. Chip technology is the best feature available to protect payment information and prevent fraud. Chip cards utilize a host of security features and measures that work together to create a multifaceted defense system against perpetrators of fraud.

The chip enabled card has been recognized by experts as the transaction method of the future. Merchants are pleased with this form of payment as it speeds up the transaction process allowing more customers to be served. The use of this technology is the latest action of the financial industry’s to prevent lost and stolen financial information, and to secure electronic payments safely and effectively.

About Author

As Canada’s, and one of North America’s largest online payment transaction processors, we provide industry leading payment gateway services for card issuers and acquirers along with merchant accounts and merchant services.

The History of Smart Card Technology

The smart card as we know it has become a very common convenience and it was introduced in it’s modern form in 1978. These days smart cards are seen in a wide variety of devices that we use every day from cell phones to credit cards, debit cards and memory devices. The main function of the smart card is to use the technology of compact chips to process data inside whatever device it is used in. Smart cards resemble credit cards, many of which have proportions which are identical to their credit and debit card cousins, with the also similar magnetic stripe on the back. Rather than relying thousands of microscopic magnets oriented in a particular way to represent the user’s information, smart cards can electronically store considerably more information with the use of a microchip. Generally they are used for financial payment instruments, security badges and authentication mechanisms for computer equipment.

Contact Based Smart Cards

Quite simply, contact based smart cards are those which need to be plugged into something in order for them to work. There are two types of these contact based smart cards available, one of which is a memory card which will only allow memory to be read and written to it. The other type is a microprocessor card which has processing capabilities as well as memory. It is the latter type of contact based smart card which is used in complex devices such as mobile phones and credit cards. Memory cards are the other common type of smart cards, being used as they are in cameras, laptops and other devices which makes use of storage. Mobile phones use these kinds of cards in order to add extra functionality to that which their SIM cards already provide.

Contactless Smart Cards

This type of contactless smart card communicates with other devices via the use of radio frequency identification technology (RFID). During the entire communication process the card at no point needs to touch the surface of the reading device. It is this sort of technology that is used to make activities such as boarding a bus or paying with a credit card much faster and easier.

Concerns Over Security

The introduction of thse contactless smart cards initially sparked fears over potential security risks. The worry was that since there was a distance between transmitter and receiver, a potential identity theif would be able to stand a small distance from the transmitter and read the data from the card. Fortunately these concerns were unfounded since data on the card was encrypted using at least 128-bit encryption, making it highly unlikely that any theif would be able to process the data.

Contact Sections

Smart cards can receive electrical signals from different locations from different readers. Every card reader that a contact based smart car is placed in will place it’s electrical contacts on top of the car, right above each section. to prevent signals from going to the wrong end of the card the metal contacts are split from one another.

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About Author

Dave Matthews is writing on behalf of smart and combi cards manufacturer, Universal Smart Cards.