A chip card is more secure than a standard magnetic stripe card because the chip is harder for fraudsters to copy. But chip cards are not all equally secure. Chip-and-PIN credit cards are more secure than chip-and-signature credit cards because it’s harder for someone to guess your PIN than to forge a signature.
Still, chip cards are not completely secure. And their security advantage over magnetic stripe cards might not affect your wallet as much as you might think.
For starters, all of the major credit card issuers provide $0 fraud liability guarantees to their customers. That means you won’t have to pay for unauthorized transactions if a fraudster ever gets his or her hands on your account information.
Secondly, all chip cards currently have magnetic stripes. This is to prevent usability issues in the United States, where chip-enabled payment terminals are not fully rolled out yet. But it also introduces security vulnerabilities. Special encoding on a chip card’s magnetic stripe makes a copied version useless at a chip-enabled payment terminal, according to Randy Vanderhoof, executive director of the Smart Card Alliance. However, that won’t necessarily be the case on a standard point of sale machine where your card is swiped.
With that being said, chip-and-PIN credit cards are the only credit cards with which you can expect to encounter no difficulties when traveling around the world. Not only will they work at offline payment terminals, but they’re also more familiar to foreign merchants, who might balk at swiping a magnetic stripe card.
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