RFID and EMV Chips Now in Credit Cards
Written by: Kristy Welsh
Last Updated: July 25, 2017
If you were one of the estimated 9 million Americans who fell victim to identity theft last year, you know that getting billed for someone else's credit card charges stinks. Enter the RFID (radio frequency identification) and EMV chips in credit cards, which are designed to provide an extra layer of protection against identity theft.
What is RFID and EMV Chip Technology?
An RFID card transmits credit card information through radio waves from a chip embedded in your card. If you are using a card with an RFID chip, and your merchant has a compatible reader, you don't have to swipe your card when making a purchase. You just hold your card inches from the scanner and voila — your sale is transmitted.
Since October 2015, credit cards in the U.S. have slowly been replaced with new cards that contain the chip-and-PIN technology that the rest of the world has had for years. That means, no more black magnetic stripes; no more signing on the dotted line for purchases.
How Does this New Technology Work?
A traditional credit card uses a magnetic strip to store account information, which is retrieved when swiped through a credit card machine. These new credit cards use an RFID to store the same information within a smart chip. The chip is embedded within the credit card itself. When exposed to a contactless credit card reader, the electromagnetic waves emitted by the reader initiate the chip to respond via a small radio antenna, which then transmits the data to the reader and on through the card issuer's network.
Chip and Signature vs. Chip and PIN Cards
There are two different implementations of EMV technology: one is called Chip and Signature, while the other is called Chip and PIN. The vast majority of EMV cards issued in the United States use Chip and Signature, which still requires a signature at the point of sale. Chip and PIN cards are compatible with terminals that require a PIN number, which is often the case at unattended kiosks in Europe and elsewhere. Locations that require Chip and PIN equipped cards include train stations, toll booths, and gas stations.
Why is this New Technology so Important?
The first reason is security. In the aftermath of so many high profile security breaches at major retailers, the recent move to EMV enabled cards can’t come soon enough. When a retailer is hacked, or when credit card numbers are stolen by other means, criminals can easily encode this information onto another credit card’s magnetic strip, a process called cloning. And one of the easiest ways to acquire credit card numbers is to use a magnetic card reader, either when your card is out of your hands, or by affixing a card reading device to a gas pump or ATM, a process called skimming. With the EMV chip system, skimming and cloning cards become vastly more difficult (though not impossible).
The second reason why American cardholders should embrace EMV technology is compatibility. Anyone who has been to Europe lately has probably found that an EMV chip card is now essential to ensure that your credit card transactions are completed smoothly. Sometimes the magnetic stripe works, but other times it unpredictably and stubbornly refuses. Many frustrated Americans traveling abroad have been unable to use their cards in certain locations, and the problem now extends far beyond Europe, as EMV readers are rapidly being deployed in South America, Canada, and other parts of the world.