Chip-and-PIN card replacing many traditional credit cards
The invent of Chip and PIN cards
With the passage of time, the trend of everything in the world is changing and since the technology has progressed so rapidly, the ways of using techniques in our daily lives have also been affected. Similarly, in that manner, the use of traditional credit cards has been replaced by the magnetic chips and PIN cards which are more effective. This change has brought a great difference in every field even in frauds and crimes due to its highly effective use. Now the question still stands here that how the use of these chips and PIN cards has come up with a change in different parts of the world.
Since people have started using the credit cards, the US consumer finance industry was of the view to make the use of these credit cards more safe and efficient but that thing remained as a big question mark for them. However, they finally came up with such a blessing for the people to make their transactions more safe and convenient.
A large number of banks and other retailers have moved their card system toward the chips and PIN cards due to the increasing number of frauds being done by copying the magnetic strips of the credit cards and then making a duplicate one. These PIN cards or chip cards are somehow difficult to be copied and the chance of its duplication is very rare. Hence, these cards are by far much more safe and efficient in use.
According to an estimate made by the Aite Group, an independent research firm situated in United States, about more than 70 percent of the US debit cards and credit cards will be converted into microchips by the end of the next year. This makes about 41 percent of all the domestic debit cards of US featuring microchips. This is really a huge number which will experience a great change in their use of credit or debit cards.
This advanced technology is even being used by the big companies which provide the EMV (Europay Master Card and Visa). Their payments are authorized once they entered the exact PIN code which consists of numerical data. Bankrate added, “These chip cards or PIN chip cards are somehow more protected and safe as compared to the previous credit cards. They cannot be used fraudulently by anyone if some card is found stolen or lost”.
Chip cards saved peoples’ money!
It is very obvious that someone’s signature can be copied with more comfort than to guess someone’s PIN code. Therefore, the use of PIN chip cards is more authentic these days. Even then, United States have not started the use of EMV technology cards due to its high expenditure but this EMV based cards are widely accepted in the western Europe, Canada and Mexico. And that is why the crime rate regarding the false transaction is more in the US than these countries.
The National Retail Federation estimates that a company needs to invest $1000 more per terminal in order to get this technology in use. The cost of each piece of card is about five times more than the old tradition cards. That means, the chip enabled cards cost $2 a piece to the companies which is very high for them and is difficult as well to manage every year with increasing number of people.
Reason of introducing the EMV technology
Aite has also added lately that the main reason of brining in this new technology is the increasing rate of fraud in the US. According to their estimate, the fraud rate in United States has been doubled since 2007. That is why the popularity of these cards has increased so rapidly. All the financial institutions including banks and other merchants were facing severe difficulties due to these frauds because they have to act upon the rules set by federal law. But now, this has been minimized by the PIN cards.
Secondly, some other factors due to which the expansion of the EMV technology has caused are the travelling inability of the Americans and the use of those old fashioned cards overseas, its decreasing cost and many more. The technology has even advanced to the use of smartphones for payments. The US financial institutions are going to issue about 100 million chip equipped cars this year which is a great number of cards but covers only a fraction of 1.7 billion debit and credit card users. However, it will make a noticeable difference. Julie Conroy, Aite’s research director states that, “Taking the world’s largest card users market from magnetic strip technology to chip technology is a massive job to do”.
The Associated Press reports says that all the merchants are going to install almost 4.5 million chip card readers in their stores at the end of this year against the 100 million chip card users nationwide. One of the recent converters in States was the Sam’s Club which officially announced that they are providing the EMV cards to their customers.
As every technology has some demerits as well so do not consider this EMV technology as complete foolproof because there are some cases in which the cyber criminals are succeeded to do frauds. These embedded chips are designed in such a way that they can change their encryption with every transaction made, therefore, if a hacker steals the merchant’s customer’s database, that data will be of no use particularly. One of the Sam’s customer told that he faced such fraud when someone opened up an account on his name and did the purchase of $1500.
That is why these small and large scale companies and organizations have tend to use the EMV or PIN card chips because of these frauds happening so frequently. People are very much worried about their money and they obviously want their money to be saved and prevented from such frauds. The people of United States largely support the EMV technology and why they shouldn’t!