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chip and pin credit card
Posted on September 26, 2014 by in Credit Fraud & Monitoring, Identity & Privacy, Personal

Earlier this year, I mentioned the rush to bring “smart” credit cards (also referred to as chip-and-PIN credit cards) to the U.S. And, since major data breaches are becoming more and more common, I’ve never been more convinced about the need for this additional security measure.

We’ve reported on a lot of data breaches this year, and with each one, we get more frustrated at the lack of up-to-date credit card security available to American consumers. Thankfully, there’s a silver lining in all of this: many financial institutions have accelerated the release process for chip-and-PIN credit cards, including JPMorgan Chase, American Express, Citi, and Bank of America.

In fact, you may have a chip-and-PIN card in your wallet right now.

So, what’s the big difference? Well, as you know, traditional credit cards store your personal information in a magnetic strip. Unfortunately, it doesn’t take much for a hacker to find that data – and verification is merely a signature. However, with smart cards, a transaction can only be made when the card is inserted into the machine at the time of the transaction.

As a consumer, you may notice that the purchase process with these credit cards is a little bit different. Instead of swiping your card and signing the receipt, you’ll need to insert your card into the machine and leave it there while the transaction processes. Verifying your identification will be as simple as inputting your PIN.

But, here’s the kicker: by October of 2015, retailers and financial institutions may be held accountable for fraudulent charges if they haven’t upgraded to the chip-and-PIN system. Some retailers, like Wal-Mart, have started to roll out new machines. And, as we mentioned in our previous post, Target is not far behind.

As with anything in the digital age, these smart cards are not fool-proof. In countries where these cards are already the standard, some hackers have found ways to forge consumer data and make fraudulent purchases.

The good news is, IdentityForce can help. With our UltraSecure+Credit plan – whether you have a Chip-and-PIN card or not – we’ll monitor your online data and your credit to ensure that your identity and financial security aren’t at risk.

Interested in learning more about credit card safety? Check out our recent post on the pros and cons of single-use credit cards.

Image courtesy of Flickr user Neil Turner.