What Is This Magnetic Square: An EMV Chip Primer

Jon Fesmire | Dec 11, 2015 @ 08:40 AM

Recently you may have received a new debit or credit card in the mail with a small metallic square on its face. These little squares signal critical advancements in credit card technology, and once you understand what they are, you may wonder why we’ve been using the magnetic strip cards for so long. After all, didn’t we shift away from cassette tapes in the 80s and 90s? Didn’t we go from VHS to DVD to Blu Ray already? So why were we using cards with magnetic bands that could be wiped clean of data with a strong magnet?

emv chip card

The New EMV Cards

The new cards use a system called Europay, Mastercard and Visa (EMV), and that metal square is a data chip. These new EMV cards have many advantages over magnetic stripe cards.

When you use them, the retailer does not need to store your card information, unlike with magnetic stripe cards. In fact, every time you make a purchase, you EMV chip creates a new transaction code. Even if a hacker did steal the information, they could not use it to make new purchases.

Europe has been using EMV cards for years and has seen a large decline in credit card fraud. Since Europe became so difficult for card hackers to target, they turned their attention to the United States, where we’ve been using the old magnetic cards, and credit card fraud in the U.S. increased.

The first wave of EMV cards in the U.S. also have magnetic stripes, and signatures. Both remind us that the change is a process. Since many retailers have not converted from the magnetic to the EMV system, you will still be able to use your chip-enabled card at places where you have to swipe, but your data will not have the protection that EMV provides.

“Signature cards” are just what they sound like: you sign at the point of purchase, rather than enter a pin number. Pin cards are preferred in Europe, and many retailers there won’t even take signature cards, so we can expect our cards to convert to pin-only cards in the next few years.

four emv chip cards

The deadline for chip enabled cards in the U.S. was October 1, 2015, and clearly the change-over is still happening. This large change will take more time to implement than the government had hoped, and card companies are trying to have two-thirds of all magnetic cards replaced by January 1. That’s over one billion credit and debit cards.

Only the stores at which you shop and credit card issuers will be liable for any problems with not getting the cards out, including fraud. So, if your card or card data gets stolen and used, you will not be responsible for the charges.

Using an EMV Card

Even after years of having magnetic cards, I still sometimes don’t swipe quite right. I have a feeling I’m not the only shopper with this problem. The new EMV cards should fix that.

There are two ways to make a point-of-sale purchase with an EMV card, depending on the system the merchant uses. For the first, you insert the chip-side of your card into a slot and give it a couple of seconds. After it reads the chip, you remove it. Then there’s the tap method. You simply tap your card against a screen and it automatically reads the chip.

Once you have switched to an EMV card, remember to update your information with the various services you pay using your card, including your self-storage company.