High Security Credit Cards: What You Need To Know

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With the common occurrence of credit card fraud and identity theft, credit card security has become a hot topic. Did you know that high security cards using chips and PINs have been in use in Europe for a while now? They've also been used in many countries in Asia and South American, and Canada is converting to the chip and PIN technology that these cards use. Furthermore, did you know they're on their way to America? Following is everything you need to know about high security credit cards.

The most common type of credit card in the United States uses magnetic stripe technology, which is, unfortunately, relatively simple to clone. This leads to increased recurrence of credit card fraud. However, chip and PIN cards, also known as EMV (Europay, Mastercard, and Visa) cards or high security cards, are much more secure.

Finance companies Wells Fargo and JP Morgan Chase are working hard to bring chip and PIN technology to the States, which should significantly decrease credit card fraud. The initial launch ...
... of high security cards will begin with approximately 15,000 of Wells Fargo's frequent traveler customers and select JP Morgan Chase customers later this summer.

This is a solution for frequent travelers, as it's impossible to use magnetic stripe credit cards with many merchants in those countries that have instilled the chip and PIN technology. (While it is true that American cards issued by Visa, American Express, and Mastercard are required to be accepted internationally, it can be frustrating to find someone that can process magnetic swipe credit cards.) Magnetic swipe cards will continue to be more and more inaccessible overseas, which is why this kind of transition in the United States is important. Furthermore, it's a way for America to give the technology a try and see how it affects the rate of credit card fraud.

But what is a high security credit card, and how does it work?

With magnetic stripe credit cards, the merchant must trust that the person using the card is the actual cardholder. In turn, cardholders must trust the merchants to not use their credit card information in a fraudulent way. However, with chip and PIN cards, face-to-face credit card fraud will decrease dramatically. Instead of signing your John Hancock to a receipt or electronic signature box, the chip in your high security credit card is scanned, and you are required to enter a PIN, just like you would at an ATM or with debit card purchases.

At first, chip and PIN technology may seem a bit overwhelming or difficult to understand, but as you can see, it's quite simple. Magnetic stripes require a signature and nothing more, which chip and PIN cards require the cardholder to enter the correct PIN. It doesn't get any simpler—or more secure (at this point in time, anyway)—than that!

Katrina Robinson is a freelance writer and editor who covers a wide variety of finance topics including the best 0 APR credit cards, balance transfers cards, and reward credit card offers.