Credit card companies are moving from the mag stripe to a chip technology for payment processing, leaving many customers wondering why this change is necessary. Here’s an explanation to help you learn more about the technology:
Old Mag Stripe Technology
The mag stripes use old technology that dates back to the 1980’s that was used for cassette tapes. This technology was easily mimicked and could be transferred to create fake credit cards. This process allowed the credit card information to be duplicated over and over again.
Chip Card Technology
In comparison, the new chip card technology makes it hard for financial thieves to duplicate the card. Each time a transaction is run on the card, it basically sends a new pin that is specific to the transaction. The authorization sends the pin to the issuing bank, then it updates and sends back a new pin.
So, if someone mimics a chipped card and tries to use the card at a new location, the detailed data won’t be embedded in the next authorization that goes through. This protection makes it safer for both businesses and consumers to use the chipped cards instead of the magnetic stripe technology.
Is it Safe to Enter My Pin Number?
Most debit cards have a Visa or MasterCard logo on the card, which means that the card can be used like a regular credit card. Customers have the option to swipe or insert the chip and run the transaction as if they were using a credit card.
On the other hand, you can flip the debit card over and see other logos on the back: Star, InterLink, Explorer, etc. Those logos are for the debit networks. When doing a debit transaction, the customer uses the card and then enters the debit PIN number which is sent through those networks.
For consumers, there isn’t a big difference between these two types of transactions. For business owners, there is a little more security protection if the customer uses the PIN. If the person knows the PIN for the card, then it increases the likelihood that the customer is the real owner of the card. In the situation where the card is stolen, it is less likely that the thief will know what the PIN is when they try to use the card.
Safe Credit Card Transactions for Your Business
Your point of sale system should have the ability to accept chipped card transactions. Would you like more information about credit card processing safety? Contact us to learn more about the options that are available in the industry.