Credit Cards

In 2013: A More Secure Credit Card?

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The world of debit and credit cards is changing rapidly, and it’s beginning to look as though Americans will have to start adapting to new types of payment technology when making a purchase in the near future.

MasterCard recently unveiled what it calls its “roadmap” toward issuing EMV—or chip and pin—credit and debit cards en masse here in the U.S. Cards using the EMV (which stands for Europay MasterCard Visa, after the companies that pioneered the technology) system are used ubiquitously in most countries around the world, and the U.S. is currently the only major nation in the world that still uses the type of cards that store users’ payment information with a magnetic strip on the back.

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The plan, which comes quickly on the heels of a similar announcement from Visa, the world’s largest payment processor and MasterCard’s primary competitor, will help to swap out the cards currently filling American wallets for new ones that store data not on magnetic strips, but rather on small microchips embedded in the cards themselves. While some banks currently offer these types of cards to consumers, most do not, and consumers who use them may encounter some difficulties in finding a merchant who accepts them in the U.S. For the most part, EMV cards issued by American lenders bear both magnetic strips and are granted to consumers who travel abroad regularly.

MasterCard says it is working with companies to ensure that the infrastructure for an EMV acceptance system is in place by April 2013, saying it wants to have these systems ready to be installed for ATMs, point-of-sale acceptance and both online and mobile commerce. Already, the payment processor has helped to roll out and develop EMV systems in more than 130 countries, and more than half of the 1.2 billion EMV cards in circulation worldwide at the end of the second quarter of 2011 bear either the MasterCard brand or its affiliated brand, Maestro.

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EMV cards work by having a consumer wave the plastic over a point-of-sale terminal that reads the microchip embedded in it, and then enter a PIN code to confirm the purchase—hence “chip and pin.” For this reason, they are considered far more secure than the current magnetic strip technology.

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