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Why Does It Take So Long to Use My Chip Credit Card?

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There’s a good chance by now that a retailer (or their payment terminal) has prompted you to dip your chip credit card to pay for a purchase. The lag time can certainly inspire annoyance — particularly if you were trying to make said purchase during the mad holiday shopping rush— but it also could have simply led you to wonder: What exactly is the hold-up?

How Payments Get Processed 

Whenever you use a credit card or a debit card to pay at a retailer’s register, information stored on the plastic gets transmitted through the payment network (generally Visa, MasterCard, Discover or American Express) to the issuing bank. This information includes your name, account number, its expiration date and a security code known as the card verification value, or CVV1. The bank uses this info to verify payment — for instance, it’ll check that the card is valid, hasn’t been reported lost or stolen and whether there’s enough money or credit left on the account to support the payment, among other things, said Jason Oxman, CEO of the Electronic Transaction Association.

Once all of its algorithms have been crunched, the bank tells the network who tells the retailer whether the payment should be approved or denied and viola!  — the transaction is completed.

Now, as you may have heard, the CVV1 on a magnetic stripe is static. It’s always the same and generally three- to-four digits long. The CVV1 on a chip, conversely, is dynamic — it changes every time you use the card and is essentially what makes it less susceptible to counterfeiting during in-store transactions. (You should still monitor your statements for fraud and check your credit if you’re ever given reason to believe your personal information has been compromised. You can do so by your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.) The code’s also longer, which is a major reason why, yes, the transaction itself takes more time to process.

“It takes the message longer to transmit because you’re transmitting more info,” Oxman said. “Just like it takes longer to download an HD movie than a standard definition movie.” But that longer, ever-changing security code isn’t the only reason you may feel like you’re waiting forever for your chip card to work.

A Chip in the Process

“There is a perception issue here,” Oxman said. “There are a couple of things that make the process seem like it takes longer.”

For starters, your chip, essentially a mini-computer, has to power up — that’s why you have to leave it in during the entire transaction, Oxman said. And, unlike your magnetic stripe, which can essentially get swiped at any point in time at the register, the chip card can’t be inserted until the transaction total has already been tallied, so you can’t put your credit card away (and busy yourself with other things) while your payment gets processed.

Plus, some people are still confused about how the card works — or whether a particular retailer accepts them — which is contributing to longer lines and lag times, Oxman said. Fortunately, things should get better.

“The transaction speeds will improve as the technology continues to improve and consumers get used to doing this,” Oxman said. And your chip’s presence could speed payments up generally in the long-term.

“It is a potential dirver for mobile payments and contactless card because those transactions are faster than chip cards,” Oxman said.

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  • Ima M.

    I have been wondering! Thank you for this explanation.

    Also, I thought you’d want to change “dirver” to “driver.” :-)

  • RalphF

    OK, more things are going on when a chip card is used than when a magnetic strip card is used. I understand that. So maybe it should take 15 milliseconds instead of 1 millisecond.

    And why can’t all of this take place before the final total is in for the purchase? Either the card is valid or it is not–what does the final tally have to do with that?

    Also, why must the card remain in the reader the whole time?

    All of these procedures are just poor choices made by the designers of these chip cards. They need to figure out a way that we can put the card in and take it out immediately so we can put the card back in our wallet. This is not rocket science and the process should be improved immediately.

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