Issue of chip based credit cards

Due to the globally wide spread incidence of credit card fraud, a more secure and technologically advanced credit card is now available to card issuers, who are required to be compliant with what is known as EMV standard within the given time frame. EMV is a global standard for credit and debit payment cards based on chip card technology. As of Q1 2008, there were more than 730 million EMV-compliant payment cards in use worldwide.

Payment chip cards contain an embedded microprocessor, a type of small computer that provides strong security features and other capabilities not possible with traditional magnetic stripe cards.

When inserted into a card acceptance device, the contact allows the chip to connect to a reader. This connection enables the chip to get power from and exchange data with the terminal. This is called contact chip card technology.

Another type of chip card technology used for payment is called contactless. It works by holding the contactless chip card within a couple of inches of a contactless-capable reader. The reader energizes the chip embedded in the card and allows exchange of data via radio frequency without the card ever leaving the cardholder’s possession. Research has shown that a contactless transaction is approximately 53 percent faster than a traditional magnetic stripe credit card transaction and 63 percent faster than using cash.

Advantages of EMV Contact and Contactless Payment Cards

  • More secure against credit card fraud than cards that rely only on data encoded in a magnetic stripe on the back of the card
  • A transaction-unique digital seal or signature in the chip proves its authenticity in an offline environment and prevents criminals from using fraudulent payment cards
  • Can be used to secure online payment transactions and protect cardholders, merchants and issuers against fraud through a transaction-unique online cryptogram
  • Supports enhanced cardholder verification methods
  • Stores considerably more information than magnetic stripe cards


SLBA News


Banking News