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Committing fraud by stealing credit and debit card numbers continues to be a major data security issue and only seems to be growing worse. But there is an effort underway by the payment card industry to include chip technology in payment cards to make your information contained on payment cards more secure. Read below to find out more.



The payment card industry is shifting to chip technology rather than the magnetic strip to store personal information on your payment cards. Generally, “payment card” refers to credit and debit cards, but could also mean prepaid cards and other types of payment cards.


EMV defined

Chip technology, in the industry, is often referred to as “EMV.” EMV stands for Europay, Mastercard, Visa. The requirement for the chip technology is an industry standard—that means it’s not required by the government, but rather by the payment card industry itself.


What is a chip and what does it do?

The chips on many cards are physically embedded computer chips that contain a security component called an integrated circuit card verification value. This protects against copying data from the chip in a process similar to encryption.



Now. More precisely, the switch to chip technology is happening on a rolling basis and has already begun.


When should I expect to receive a card with chip technology?

Chip technology is being implemented on a rolling basis. Banks may be issuing new cards for the purpose of providing cards with chips, or they may be waiting until the card expires and will send the new card with chip technology at that time.


Will merchants be able to accept my card with a chip?

The payment card industry requires merchants to provide a point of sale system that accepts the chip technology. According to the payment card industry, merchants were required to have these in place by October 1, 2015.  If they do not, liability for fraudulent purchases associated with a breach at that merchant shifts to the merchant rather than the card-issuing bank. That means that if the merchant cannot accept chip technology, and there is a data breach at that merchant and credit card numbers are compromised, any fraudulent purchases from that breach are the responsibility of the merchant.

Consumers should note that for merchants that do not provide a point of sale system capable of reading chips, magnet strips will still be available.



Identity theft and fraud continue to be major issues for consumers, banks, and merchants alike. This is an effort to combat identity theft and credit card fraud.


Why does this matter? What is the purpose of putting chips in cards?

There are some positives to switching to chip technology, which include:

  • Consumers will be better protected from fraud;
  • Switching prior to the deadline shields merchants from any liability shift;
  • Many point of sale terminals that accept chip technology also accept mobile payments, which will enhance the consumer experience by providing the ability for different methods of payments; and
  • It will promote a more secure business environment.



Where chip technology is implemented, you will make payments in a slightly different way and your information will be that much more secure. You may also need to enter a PIN rather than sign, depending on whether your bank or credit card company issued you a card with an associated PIN.


How will the chip protecting information on your differ from the magnetic strip?

The chips on many cards are physically embedded computer chips that contain a security component called an integrated circuit card verification value. This protects against copying data from the chip in a process similar to encryption. There is no such protection on a magnetic strip.

Unfortunately, data thieves have already developed a method to steal credit card data from a chip. The old process of “skimming” the magnetic strip involved putting a fraudulent card reader on top of or underneath the existing card reader. This occurs at ATMs and gas stations more often than other locations, but it could happen elsewhere. For chip technology, scammers have developed what is being termed “shimming” technology that is placed in the chip reader and will allow the information from the chip to pass through it into the chip reader. When the information is passing through, scammers can snag it.

The benefit of chip technology, though, is that a unique identifier is created for each transaction. This means the data sent from the chip to the card reader is relayed only for that one transaction. If the data thief steals that information, the thief has the information for that one transaction only.

The information is more secure on a chip, but not 100% secure.


What will the transaction look like if I use my card with a chip?

Consumers will insert their cards into a slot in a chip reader and hold them in place while the reader communicates with the chip on the card. After the reader reads the information, the consumer will either be prompted to enter a PIN if there is a PIN associated with the card, or the consumer will sign for the purchase.


What if a merchant does not have a point of sale system that accepts cards with chips?

For now, it will be both chip and strip included on cards and accepted at merchants. Consumers should note that all new cards issued by banks will continue to have magnetic strips, even when they have a chip. Likewise, even at merchants that have chip readers, magnetic strip readers will not be phased out at this time.




How can you, as a consumer, guard against credit and debit card fraud?

You can be judicious about those to whom you give any information and make sure to check your credit card statements and bank statements and look over every line to make sure none of the purchases were fraudulent.


Fraud liability protection

Luckily for consumers, there is a federal law limiting liability for fraudulent purchases on credit cards to $50. That means if a data thief steals your credit card number and uses it to buy a $1,000 computer, you cannot owe more than $50 of that fraudulent purchase. There is an equivalent Massachusetts law that caps fraud liability at $50 for debit cards.



If you have additional questions, contact the Office of Consumer Affairs and Business Regulation by calling our Consumer Hotline at (617) 973-8787, or toll-free in MA at (888) 283-3757, Monday through Friday, from 9 am-4:30 pm. Follow the Office on Facebook and Twitter, @Mass_Consumer. The Baker-Polito Administration’s Office of Consumer Affairs and Business Regulation is committed to protecting consumers through consumer advocacy and education.




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