How do Chip Cards Work | What information is stored on a credit card chip

 

How do Chip Cards Work?

It wasn't too long ago that we were mostly paying for things by swiping our credit cards as furiously as you'd swipe toilet paper after eating that spicy burrito special 

But the venerable magnetic stripe is being phased out in favour of EMV chips which have become quite common in most of the world over the past few years but are just now catching on with our friends in the United States but why are we ditch the mag stripe in the first place 

Unsurprisingly one reason is security mag stripes store data like card numbers and expiration dates in an insecure manner 

Meaning bad guys can steal the information quite easily in a variety of ways for example if you're somewhere like an ATM or gas station that only accepts mag stripe cards visually inspect the card reading equipment and give it a little jiggle to see if it's loose 

If something seems not quite right it's possible that someone has installed an inexpensive card skimmer that reads your card as you insert it into the slot and transmits the information to a nearby criminal who can then use your card number two at best waste your money and at worst make super suspicious purchases that could land you on some kind of FBI watch list 

More skilled hackers can even sneak malware onto retail systems that are a lot more difficult to detect this is what happened in the u.s. recently 

When tens of millions of customers had their data stolen when cybercriminals planted malware in the payment systems of the retail giant target 

So how then do chip cards prevent these types of breaches well they use a form of public-key cryptography you can learn more about that in general 

Here's what happens specifically each time you insert your chip card into a reader the car generates a random code that's good for that transaction only depending on how exactly the encryption is implemented 

The terminal can use encryption keys to decrypt your account information and authorize this transaction even if it can't communicate with your credit card company 

Unlike mag stripe cards which always had to do this to process a transaction since each code is one-time use only it's totally useless to an attacker that intercepts it and if your car gets stolen 

It's extremely difficult for someone to clone the chip as opposed to magstripe cards which spit out your information as readily as a participant in a watermelon eating contest spits out seeds

That visual aside many systems also now require the use of a pin or personal identification number so even if a thief tries to use your original card instead of cloning it the transaction 

Won't be authorized unless they know your PIN is a better solution than the old authentication method that only involved signing a receipt 

Of course, the EMV chip cards are not foolproof aside from the constant arms race between financial institutions and black hats who try to crack their security there's also the backwards compatibility purposes of your card 

I mean many chip cards still have a mag stripe which is just as vulnerable as ever and the chip doesn't do much to stop fraud in situations where someone can just enter a card number such as pretty much all online stores that have online shopping 

That being said it's still better than what we used to have but until we have James Bond-style biometric scanning at every gas station and 7-eleven in the freaking world keep your card close and think twice before using it at a shady merchant 

You don't want to have your credit card limit maxed out by some dude who promises you an official - action figure with hot-swappable sandals and a little version of the LTTE sweater after he says all you have to do is put your credit card information into the message box like I did.

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