Credit cards have long been a double-edged sword for many people. In certain scenarios, they can be life-savers. Given all the issues associated with credit cards from theft and unwise spending policies to fraud, they're certainly not without their problems. Just about everyone has themselves experienced issues with credit cards at one point or another, or knows someone who has, and fraud is often at the top of the list. Soon, a new form of card is expected to hit the market and perhaps even eclipse the traditional credit card in a period of just a few years.
They're called EMV cards, and they're showing quite a bit of promise in the financial industry. The major difference between EMV (which stands for Europay, Mastercard and Visa) cards and traditional credit cards is that they feature a microprocessor chip that changes the way data is encrypted for each purchase that is made. The EMV pin-and-chip replaces the magnetic strip on the back of standard credit cards and uses cryptographic algorithms to provide authentication and encrypt data, thus creating a much safer environment for making purchases and staying clear of the issues commonly associated with fraud such as phishing, skimming and physical theft.
For those who are unfamiliar with the concept of EMV-enabled cards, it may sound like cutting-edge technology that has yet to be seen on the market anywhere in the world. The fact is EMV cards are already widely used in both Europe and Asia, as consumers have been quick to adopt the technology in hopes of keeping fraud at bay. In America, however, EMV is still relatively unheard of by most consumers, which is perhaps one reason why it has such a sense of mystique. That being said, the status quo is clearly changing in America. Major credit card companies are working to roll out the new EMV cards with haste, catering specifically to those customers who travel and do business abroad on a regular basis. As time rolls on, EMV cards will no doubt be geared toward typical American consumers, and are set to replace most of the magnetic strip cards by October of 2015, according to ABC News.
A step toward tighter security
Anyone who remembers the recent security breach suffered by Target and other major stores is likely to be quite leery of how they now use credit cards. It's a long-standing issue that has plagued the credit card industry for years, and with technology becoming more and more advanced as time goes on, there's no getting around the fact that the issue is only going to get worse if changes aren't made. Since EMV-enabled cards have been implemented in Europe and Asia, credit card fraud has dropped a whopping 35 percent. It should stand to reason, then, that making the shift in a new direction would be advantageous not only for consumers, but credit card companies as well.
One of the issues associated with the impending rollout of EMV-enabled cards is the fact that they come with higher production costs than today's standard credit cards. Many of these cards utilize ultra-thin batteries that can last up to five years and have the ability to change the digital pin readout for each transaction that is made. As one might expect, the extra materials (in addition to the new technology) being used in these cards come with higher production costs, which may effect which companies decide to use EMV cards early on. Even if the technology will someday take over magnetic cards, it's still going to take over a year for card companies to make the switch and Americans to embrace the new technology.
The future of EMV cards is looking bright, especially if they can reduce the chances of fraud as much as they have in Europe and Asia. If production costs can be kept down and American consumers are quick to adopt this new technology, use of EMV-cards will no doubt soar once they finally hit the market.
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This article originally appeared on MyBankTracker