“Chipping” for Credit Card Security

Financial Privacy

Could you imagine carrying a 1980s-style cellular phone in your purse or hip pocket today? Probably not, since the bulky devices would make for an uncomfortably tight fit. They are technologically obsolete compared to the slim smartphone you might be carrying.

Yet not everything you’re carrying around has improved in functionality as rapidly as cell phones. For example, the magnetic-swipe credit cards that are in your wallet. Did you know they are based on technology that is decades-old?

In some ways it’s good that we don’t yet have “smart” credit cards that store and transmit our biometric and financial data wirelessly. Payment by smartphone is catching on in some areas, though. In the future, we might be our own virtual credit cards, with merchants charging us by electronically scanning our fingerprint, iris, or other biometric.

Travel Advisory: U.S. Credit Cards
Increasingly Being Rejected Abroad

The current antiquated credit card processing system raises security issues. Credit card fraud is easy to commit. Magnetic swipe cards can also be unreliable, especially when you travel out of the country. I discovered this first-hand during my travels to Europe this summer, and it nearly caused me to miss my flight back home.

My Visa card was rejected at one souvenir shop because it didn’t have a microchip and PIN associated with it – increasingly standard features in Western Europe. No big deal; I found another store that swiped my antiquated card the old-fashioned way.

But a few days later in Dublin, when I attempted to fill up my rental car with gasoline before returning it, the unattended station I pulled into only accepted “chip and PIN” cards. I nearly got lost trying to find another station that was staffed with a person who could accept other payment methods.

Your Credit Cards Will Soon Get a High-Tech
Upgrade – Whether You Like It or Not

The chip-and-PIN (or chip-and-signature) method is coming to the U.S. soon. By the end of 2015, 70% of new U.S. credit cards will have EMV/Europay style security chips. Your cards will be more secure, in theory at least. But the potential for security chips to be used as spy chips is troubling. If you prefer to stick with chipless cards, then you might want to ask your card issuers to send replacement magnetic swipe cards now. By next year, any new credit cards you get may contain microchips.

If you’re traveling abroad, especially to Europe, bring alternative methods of payment. You might need them in a pinch!

In addition to cash, consider bringing a prepaid travel card with chip-and-PIN capabilities. A prepaid travel card works just like a pre-paid debit card and can be used in most places where credit cards are accepted. You can use it to pay for food, lodging, and transportation – though hotels, gas stations, and rental car companies will typically want to put in a temporary authorization (which may exceed the amount you are actually charged) to make sure you have sufficient funds on balance. So load it up with more funds than you actually intend to use.

You are protected by the Visa/MasterCard issuer in the event of theft or fraudulent use. Consider also using a fraud-monitoring service such as LifeLock to further protect all your credit and bank cards. LifeLock will notify you if your cards have been compromised.