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A chip card is a modern bank card with a built-in microprocessor (also known as a chip), which has a number of advantages over classic plastic with a magnetic stripe. Chip plastic can already be seen more and more in circulation, and some banks are issuing even the most budget cards with a chip (for example, Sberbank has been issuing its Visa Electron Momentum and Maestro Momentum instant issuance cards exclusively with a chip since 2013).
The main advantages of the chip over the magnetic stripe
Let's consider the main advantages of plastic with a chip over a magnetic card, thanks to which the former are actively flooding the market, and also talk about the inherent disadvantages of both.
1. The chip is much safer than the magnetic stripe. In fact, it is a full-fledged microcomputer with built-in memory for storing data. The data is protected by crypto-resistant algorithms, and the information from the chip cannot be copied when directly connected to it, it is also almost impossible to duplicate it (it is clear that everything can be forged, but by what means?).
The magnetic stripe is easily copied with inexpensive devices (skimmers), costing from $ 100, after which the attacker can make a duplicate card and will calmly pay with it until the loss is noticed and the card is blocked.
That is why it is recommended to go abroad with a chip card, especially if it is a credit card (in some countries skimming is very developed ), because if bank accounts are stolen from the card account, then you will have to give your hard-earned money. By the way, the magnetic one may not be accepted for payment there.
2. A transaction (exchange of information with an acquiring bank) on a chip card is each time confirmed by a new, specially generated code for it. Therefore, intercepting a transaction is useless. On the contrary, a magnetic card always transmits the same data identifying the card, the interception of which will allow a fraudster to recover information on plastic and create a duplicate of it.
But you have to "spoil the picture" a little, tk. from phishing - theft of data on the Internet from a bank card (both chip and magnetic), unfortunately, no one is immune. When paying in an online store, the owner of the plastic enters into a special payment form the card number, its validity period, first and last name, as well as the CVV2 / CVC2 authentication code. If this data falls into the hands of an attacker (in various ways), then no chip will save.
3. Plastic with a chip is more durable than a magnetic card (6-8 years versus 2-3). If you often use the card, then you probably paid attention to its condition after 1-2 years: the film with a magnetic strip applied to it begins to peel off (due to frequent payments in POS terminals of retail outlets) and letters and numbers (especially embossed ones) are erased. In addition, the information on the strip can be distorted due to contact with strong magnetic fields.
4. It is possible to exchange data with the bank in a delayed mode (offline transactions). Unlike magnetic cards, which require online authorization, chip cards contain information about the state of the account, which makes it possible not to ask the bank for "permission" for an operation in real time. All transactions on chip cards can be accumulated during the day and transferred to the acquiring bank (or to the processing center) at one time (in deferred mode).
What does it do? Possibility to pay at a point of sale if there is no connection with the bank or if the servers in the processing center are not working.
5. It is possible to issue chip cards with various additional applications, both financial and non-financial. The range of such applications is very wide and with them the card can be: transport (travel in the subway, bus, trolleybus), fuel, identification, with an identity card (passport), social, bonus, with medical insurance, and so on. Many applications can cohabit on the same plastic, for example, a transport credit card.
Along with the software functionality, the hardware is also developing. So now the technology of contactless payments PayPass from MasterCard (its analogue from Visa - PayWav) is popular, when an NFC chip with an antenna (NFC is a short-range wireless high-frequency communication technology) is embedded in plastic and you can pay for purchases with one touch without entering a PIN code and signatures on the check (albeit only for amounts not exceeding some money).
Combo cards (with chip and magnetic stripe)
But let's get back to the prose of life: have you ever seen a card with only a chip in world? Most probably not. Banks in world produce (emit) combined plastic with a chip and a magnetic stripe at the same time, apparently due to the lack of infrastructure for accepting purely microprocessor plastic (so far not all terminals and ATMs can service the chip?). Therefore, the client will be served either on a chip or on a magnetic stripe, which means that all the disadvantages inherent in "magnetic" cards will come up again?
This is exactly the case, but the risks are minimized, since the strip contains information about the presence of a chip, and if a fraudster makes a copy of your combination card, he will not be able to use it in stores where the terminal is designed to accept chip cards. In this case, the terminal will require a chip to be inserted (ATMs where it is possible to accept chip plastic will also not accept a chipless duplicate). But if the POS terminal “cannot” read data from the microprocessor, then, unfortunately, the operation will be performed.
It should be noted that international payment systems give preference to cards with a chip (mainly due to increased security) and practice the rule of transfer of responsibility. This rule shifts all responsibility to the acquiring bank (card service provider) if a combination card fraud occurs at a non-chip merchant served by that bank.
The acquirer must reimburse all losses if the card was copied (skimmed) at this outlet, but the injured plastic holder will receive compensation only after an investigation, when it shows that the person really suffered from fraudsters, and did not try to deceive the bank himself. Let's add this rule to the pluses of microprocessor cards.
Are there any disadvantages to chip cards?
Among the shortcomings, one can single out the slowness ("communication" of the microprocessor with the equipment of an ATM or POS-terminal), although with the development of modern technologies, the delay will be less and less.
It is necessary to enter a PIN code when paying, but rather, this is additional protection.
Chips are much more expensive than their magnetic counterparts, but with large batches this drawback is reduced to nothing, and it does not concern the consumer at all - the card will not become more expensive for him. Let's assume that banks pay for the safety of their funds (and the client).
Undoubtedly, the future belongs to chip cards, and plastic with a magnetic stripe will soon be as rare as a cuckoo clock.
- What is a chip card?
- The main advantages of the chip over the magnetic stripe
- Combo cards (with chip and magnetic stripe)
- Are there any disadvantages to chip cards?
A chip card is a modern bank card with a built-in microprocessor (also known as a chip), which has a number of advantages over classic plastic with a magnetic stripe. Chip plastic can already be seen more and more in circulation, and some banks are issuing even the most budget cards with a chip (for example, Sberbank has been issuing its Visa Electron Momentum and Maestro Momentum instant issuance cards exclusively with a chip since 2013).
The main advantages of the chip over the magnetic stripe
Let's consider the main advantages of plastic with a chip over a magnetic card, thanks to which the former are actively flooding the market, and also talk about the inherent disadvantages of both.
1. The chip is much safer than the magnetic stripe. In fact, it is a full-fledged microcomputer with built-in memory for storing data. The data is protected by crypto-resistant algorithms, and the information from the chip cannot be copied when directly connected to it, it is also almost impossible to duplicate it (it is clear that everything can be forged, but by what means?).
The magnetic stripe is easily copied with inexpensive devices (skimmers), costing from $ 100, after which the attacker can make a duplicate card and will calmly pay with it until the loss is noticed and the card is blocked.
That is why it is recommended to go abroad with a chip card, especially if it is a credit card (in some countries skimming is very developed ), because if bank accounts are stolen from the card account, then you will have to give your hard-earned money. By the way, the magnetic one may not be accepted for payment there.
2. A transaction (exchange of information with an acquiring bank) on a chip card is each time confirmed by a new, specially generated code for it. Therefore, intercepting a transaction is useless. On the contrary, a magnetic card always transmits the same data identifying the card, the interception of which will allow a fraudster to recover information on plastic and create a duplicate of it.
But you have to "spoil the picture" a little, tk. from phishing - theft of data on the Internet from a bank card (both chip and magnetic), unfortunately, no one is immune. When paying in an online store, the owner of the plastic enters into a special payment form the card number, its validity period, first and last name, as well as the CVV2 / CVC2 authentication code. If this data falls into the hands of an attacker (in various ways), then no chip will save.
3. Plastic with a chip is more durable than a magnetic card (6-8 years versus 2-3). If you often use the card, then you probably paid attention to its condition after 1-2 years: the film with a magnetic strip applied to it begins to peel off (due to frequent payments in POS terminals of retail outlets) and letters and numbers (especially embossed ones) are erased. In addition, the information on the strip can be distorted due to contact with strong magnetic fields.
4. It is possible to exchange data with the bank in a delayed mode (offline transactions). Unlike magnetic cards, which require online authorization, chip cards contain information about the state of the account, which makes it possible not to ask the bank for "permission" for an operation in real time. All transactions on chip cards can be accumulated during the day and transferred to the acquiring bank (or to the processing center) at one time (in deferred mode).
What does it do? Possibility to pay at a point of sale if there is no connection with the bank or if the servers in the processing center are not working.
5. It is possible to issue chip cards with various additional applications, both financial and non-financial. The range of such applications is very wide and with them the card can be: transport (travel in the subway, bus, trolleybus), fuel, identification, with an identity card (passport), social, bonus, with medical insurance, and so on. Many applications can cohabit on the same plastic, for example, a transport credit card.
Along with the software functionality, the hardware is also developing. So now the technology of contactless payments PayPass from MasterCard (its analogue from Visa - PayWav) is popular, when an NFC chip with an antenna (NFC is a short-range wireless high-frequency communication technology) is embedded in plastic and you can pay for purchases with one touch without entering a PIN code and signatures on the check (albeit only for amounts not exceeding some money).
Combo cards (with chip and magnetic stripe)
But let's get back to the prose of life: have you ever seen a card with only a chip in world? Most probably not. Banks in world produce (emit) combined plastic with a chip and a magnetic stripe at the same time, apparently due to the lack of infrastructure for accepting purely microprocessor plastic (so far not all terminals and ATMs can service the chip?). Therefore, the client will be served either on a chip or on a magnetic stripe, which means that all the disadvantages inherent in "magnetic" cards will come up again?
This is exactly the case, but the risks are minimized, since the strip contains information about the presence of a chip, and if a fraudster makes a copy of your combination card, he will not be able to use it in stores where the terminal is designed to accept chip cards. In this case, the terminal will require a chip to be inserted (ATMs where it is possible to accept chip plastic will also not accept a chipless duplicate). But if the POS terminal “cannot” read data from the microprocessor, then, unfortunately, the operation will be performed.
It should be noted that international payment systems give preference to cards with a chip (mainly due to increased security) and practice the rule of transfer of responsibility. This rule shifts all responsibility to the acquiring bank (card service provider) if a combination card fraud occurs at a non-chip merchant served by that bank.
The acquirer must reimburse all losses if the card was copied (skimmed) at this outlet, but the injured plastic holder will receive compensation only after an investigation, when it shows that the person really suffered from fraudsters, and did not try to deceive the bank himself. Let's add this rule to the pluses of microprocessor cards.
Are there any disadvantages to chip cards?
Among the shortcomings, one can single out the slowness ("communication" of the microprocessor with the equipment of an ATM or POS-terminal), although with the development of modern technologies, the delay will be less and less.
It is necessary to enter a PIN code when paying, but rather, this is additional protection.
Chips are much more expensive than their magnetic counterparts, but with large batches this drawback is reduced to nothing, and it does not concern the consumer at all - the card will not become more expensive for him. Let's assume that banks pay for the safety of their funds (and the client).
Undoubtedly, the future belongs to chip cards, and plastic with a magnetic stripe will soon be as rare as a cuckoo clock.
