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Chip Card

Reviewed by Bhavana | Updated on Apr 15, 2021


What is Chip Card?

A chip card is a plastic debit card or a credit card of standard size, which includes both an embedded microchip and a traditional magnetic stripe. The chip encrypts data to enhance data security when transacting in terminals, stores, or automated teller machines (ATMs). Not every card reader is chip-enabled. They are often known as smart cards, chip-and-pin cards, and chip-and-signature cards; the Europay, MasterCard, and Visa (EMV) cards are all chip cards as well.

For chip-based credit and debit transactions, a chip card is a global standard. Chip-embedded technology upgrade is a joint effort on the part of Europay, MasterCard, and Visa. This initiative aims to ensure the security and acceptance of MasterCard and Visa cards worldwide and to expand their use everywhere.

A Europay, MasterCard, and Visa (EMV) terminal is a chip-enabled display that transmits data from ATM, a store, or other points of use to the site of the dealer and card provider. The use of chip-enabled point-of-sale terminals (POS) and automated teller machines (ATMs) is becoming popular across the United States.

When commuting, the chip card offers greater acceptance and protection. Chip technology is currently present in more than 130 countries, including Mexico, the United Kingdom, and Canada.

How Can One Use a Chip Card?

Chip cards will still operate where only magnetic stripe transactions are accepted at terminals and ATMs. If a store has a chip-enabled terminal, the user inserts the face-up card's chip end into the terminal's reader slot and follows the instructions.

If the store does not have a terminal for reading chips, the customer swipes the card using the magnetic stripe. In order to approve the transaction and complete the purchase, users may be required to enter a personal identification number (PIN) or a signature.

There are no changes to transactions made over the phone or online. The chip card works the same way as with the previous credit and debit card version. Also, there are no extra fees charged for the issuance of a chip card or transaction.

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