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microship on credit card

The U.S. credit card industry is making a transition from traditional magnetic stripe credit and debit cards to cards with embedded computer microchips. Credit cards with this microchip technology are already commonplace in other areas of the world. The technology, patented back in the 1970's, has been slow in gaining acceptance in the U.S.

However, credit cards with an embedded microchip do add a layer of security that cards with only a magnet stripe on the back do not have. Actually, new credit and debit cards will have both the magnetic stripe and an embedded computer chip. Each time you use a "chip" card at a merchant, the chip generates a unique transaction code needed for approval. The code is good only for that transaction. Because the security code is "dynamic" (always changing), it is much more difficult for someone to steal and use it. Even if there were a merchant data breach or a theft of the chip information, a fraudster could not use that transaction code again, and the stolen data would be useless for counterfeit fraud.

Chip technology also provides a foundation for innovations such as mobile payments. The chip that makes NFC (near field communication) transactions possible and secure is the same technology used in chip cards.

When will the chip cards be issued and used?
Some cardholders have already received a chip card. Many others can expect to receive replacements in their mailboxes by the end of 2015. And most others are expected to have them by the end of 2016. If you want to know when your new chip card will arrive, contact your card issuer at the number on your card.

Merchants were to install chip-ready terminals in the fall of 2015, but not all will meet this deadline.  This is not a problem for cardholders, however, as the new cards do contain both the magnetic stripe and the chip. So merchants will still be able to swipe the card for purchases. Chip readers at ATMs and pay-at-the-pump gas stations are expected to arrive in 2016-2017.

Cardholder rights and protections
Chip cards provide the same cardholder protections offered by traditional credit and debit cards. Card networks and financial institutions typically provide consumers zero liability for fraudulent transactions. Federal rules also provide basic protections.

Additional information
For additional information about cardholder rights and protections and how to use a chip card, read "A consumer's guide to 'chip' cards," an informative document created by Consumer Action with a grant from Visa Inc. It is part of the Consumer Action/Visa Inc. educational project, "Know Your Card" found at www.knowyourcard.org.

For specific questions about your particular card, contact your card issuer at the number on your credit or debit card.

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