With the shift towards digital payments, the credit card landscape has evolved, too. Along with the rapid changes in the credit card space, there is a need for enhanced security measures. The EMV chip technology or credit card security chips is one such measure.
Europay, Mastercard, and Visa created EMV chip technology to store card information on a metallic chip instead of a magnetic stripe. Credit card security chips or EMV, aims to tackle security concerns and fraud.
In 2018, the Reserve Bank of India (RBI) made it mandatory for debit and credit cards to have an EMV chip to secure financial transactions from fraud and cyberattacks.
EMV chips are considered to be more secure than magnetic stripes on a credit card as they do not transfer the card number while making a transaction. Instead, they create a unique, one-time code for every transaction. This one-time code cannot be duplicated, reducing the risk of fraud or unauthorised transactions.
One time code: Each time you use an EMV chip credit card, a new unique code is created. The code is not the same. In a traditional magnetic stripe card, it is easier to duplicate the number and use it repeatedly for unauthorised transactions. Therefore, an EMV chip-enabled credit card avoids duplication of numbers. Even if somebody duplicates the number, it cannot be used to make financial transactions.
Avoids fraud: The main objective behind EMV chips is to avoid fraudulent transactions through the use of one-time codes, which are further provided to the card reader. It is not possible to replicate this code and avoid the access to fraudsters.
Difficult to get details: It is difficult to get details from EMV chip credit cards. They use small computer chips which makes it difficult to forge. It is almost impossible to simply get information from a credit card without any high-end equipment, which is a costly affair for fraudsters.
Encrypted card: An EMV chip credit card uses encrypted data to send information to the credit card issuer, which can only be decoded by special software. This makes it difficult for fraudsters to make unauthorised transactions. This is in contrast to the traditional magnetic stripe credit card which directly provides information to credit card issuer as it is.
Global relevance: EMV chips are a universal standardised technology. Therefore it is accepted as a mode of payment in every part of the world. Hence, EMV chip credit cards can be used to make payments all across the globe.
In conclusion, the adoption of EMV chips in the credit card industry is a significant step toward tackling scams and fraud. It is not only a technological upgrade but has a larger motive to secure our financial system.
