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A chip card - also called a smart card or an EMV card - is a debit or credit card that contains a microprocessor that enhances the security of cards during point-of-sale transactions.

These cards, already in use in much of the world, use a security standard originally developed by Europay, MasterCard and Visa (EMV) as a way to fight card fraud resulting from theft, skimming and counterfeiting. The EMV technology has been adopted by the other major card brands and issuers.

Chip cards add an additional layer of security to the safeguards that already protect cards. Each time a cardholder uses their chip card it generates a code that is unique to that transaction. This makes it harder to counterfeit a card or to use it fraudulently for in-store purchases.

The chip contains information about a cardholder’s account and the card expiration date. It also generates a unique code for every transaction when used with a chip-enabled terminal at the point of sale Chip cards can be used virtually anywhere this brand of card is accepted in the U.S. and around the world. If a merchant has a chip-enabled card terminal, cardholders will insert their card during the transaction. In the U.S., cardholders will still be able to ‘swipe’ their card to make a payment if a merchant has a regular terminal. They will need a PIN to be able to make a transaction at an ATM.

How to use the Card

Start the payment process by swiping your card. If the merchant’s terminal is chip-enabled, you will be prompted to insert your card:

  • Insert the card, face up and chip end into the chip-enabled terminal.
  • Leave the card in the terminal during the entire transaction.
  • Follow the instructions on the screen and either sign their name or enter their PIN as needed. They need to be sure to remove their card and take their receipt when the transaction is complete.

If the terminal is not chip-enabled, the transaction will process as it normally does from the initial swipe.

*While chip cards won’t prevent the types of large-scale data breaches that have hit some merchants, they do make it extremely difficult to produce counterfeit cards from that stolen data.