The credit card industry in the United States has been dominated by magnetic strip technology for many years now.
While this is still the dominant method that credit card companies use for their credit cards, it may not be that way forever. A new technology, known as EMV, has the potential to replace the magnetic strip in the future. What exactly is EMV and why would credit card companies use it instead of a magnetic strip?
EMV Chip Technology Basics
EMV stands for Europay Mastercard & Visa, as it is a technology that was developed by these three credit card companies. The primary difference between EMV and the magnetic strip is that EMV cards use an embedded chip within the card to encrypt the data for each transaction. When the card gets close to a reader it is activated electronically. The chip receives a signal from the card reader and then sends a signal back to authenticate the card.
These chips often have the technology to alternate between verification methods for each individual transaction. For example, sometimes it asks for a pin number and sometimes it will ask for a signature. This makes it more difficult for identity thieves to use stolen credit cards.
Why EMV is Safer
EMV is considered to be a safer credit card technology because the payment information changes every time. By comparison, with a magnetic strip, the payment information is the same for every transaction. If an identity thief is using a skimming scam, it can simply steal the information off of the card’s magnetic strip and then use it to make purchases. With an EMV card, this is not possible because the transaction data changes for each purchase. This makes it harder for identity thieves to steal all of the information that they need to be able to make fraudulent purchases.
Adoption in the US
While the technology is superior to the magnetic strip; most merchants in the United States have not adopted the technology yet. It has been used successfully in Europe for many years. However, it has been slow to be adopted in the United States. There are a few reasons that it has been slow to come to the US. First, the companies who want toaccept credit cards haven’t started making the switch to the proper hardware yet. You can not use regular payment processing equipment to be able to accept EMV payments.
Another reason that it has been slow to make the change from magnetic strip to EMV is that consumers have not been asking for it. This is because many people are not aware of it, and credit card companies in the United States have been complacent and continue offering the same technology. If more people would start demanding this type of technology from merchant services companies, it would adapt quicker. Companies who need to engage in payment processing would be able to adopt the technology that is necessary to accept EMV cards because of it.
Although this technology has been slow to be adopted in the US, some credit card companies are starting to implement the technology. Many of the credit card companies in the United States are starting to issue cards that have both EMV and magnetic strips in them. This makes it possible for them to use the cards at regular retailers in the United States or with credit card machines that use EMV in Europe. As more people start to use these cards, the technology will be adopted in the US.