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Image by Kelly Sikkema

Chip transactions vs. Swipe

Swiping magnetic stripes on cards was the default technology for decades, but is getting quickly replaced by the safer, more secure technology of Chip/EMV cards. 

When it was first introduced, the "magnetic stripe" was a breakthrough technology! It allowed merchants to get real-time authorizations from the customer's issuing bank, instead of relying on carbon-copy "knuckle-busters" and time-wasting voice authorizations. As time has progressed, the swiping technology has become more and more outdated. Fraudsters have learned how to "skim" traditional credit cards, easily making copies of cards in mere seconds. Data is easily copied, meaning that once a card gets into a fraudster's hands, it's compromised and easily replicable. Not good.

That's where chip cards come into play. Instead of a magnetic stripe holding your sensitive data, an advanced computer chip resides in the card. It encrypts your information, and the only way to decrypt the data (and view it) is to have the keys that only the banks have. As such - if a thief steals your chip card, they can't make a copy of it! They also can't "look inside" and see what the information is - it's totally locked from their perspective.

In 2015, the industry underwent a big shift (called the "liability shift") where merchants were encouraged to adopt new chip technology. Today, chip transactions are becoming the norm, but you'll likely still see holdout magnetic stripe readers for years to come.

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