What is an EMV chip and how does it work?

Many debit and credit cards carry an embedded microchip known as an EMV chip. This small computer chip includes technology that helps improve your card’s security. 

But how exactly do EMV chip cards work? Here’s what you should know about this technology and why it matters.

What you’ll learn:

• EMV chips are used to help protect debit and credit cardholders against fraud.

• For added security, EMV chip cardholders may be prompted to input a four-digit personal identification number (PIN) or provide a signature when making a transaction.

• It’s more difficult for fraudsters to duplicate EMV chip cards than magnetic stripe cards.

An EMV chip is the computer chip embedded in your credit or debit card, designed to help prevent fraudulent transactions. EMV chip technology was developed in the mid-1990s and named after its joint developers: Europay, Mastercard and Visa. Today, this technology has been incorporated into billions of cards and millions of point-of-sale (POS) systems worldwide.

There are two main types of transactions made with EMV chip cards:

• Chip and signature: Chip-and-signature transactions are more common in the United States. They require a signature to verify identity before completing the transaction.

• Chip and PIN: Chip-and-PIN transactions, widely used outside the U.S., use a four-digit PIN to authenticate payments. These transactions are typically considered the more secure option.

When you use an EMV chip card for payment, you’ll insert or “dip” the chip side of the card into a slot in the payment terminal or card reader instead of swiping it. You might be prompted to enter your PIN or provide a signature before the vendor can authenticate and authorize the transaction. 

The EMV chip then works by generating a unique, one-time code for the transaction, which is sent to the financial institution for approval. Because the technology is more difficult to replicate, it’s harder for counterfeiters to steal information from EMV chip cards.

The key difference between traditional magnetic stripe cards and EMV chip cards is the technology. Magnetic stripe cards store static—or unchanging—personal data about the cardholder within the card. EMV chip cards, on the other hand, constantly change and create a unique code for each transaction when transmitting data. Because of this, magnetic stripe cards tend to be easier for fraudsters to copy than EMV chip cards.

If you’re shopping at a merchant that doesn’t accept a card with an EMV chip, you’ll swipe your card using the magnetic stripe. Although EMV chip cards are widely accepted, some merchants still haven’t adopted this technology. 

Using a digital wallet might also be an option. You can access your digital wallet on your phone to make purchases electronically.

Although EMV chips can help reduce credit card fraud, thieves may use a scam called card shimming to copy and steal data from your card. They can use this stolen information to create a new magnetic stripe card.

You can take precautions to minimize the risk of credit card fraud by:

• Using your digital or mobile wallet 

• Not giving out your card information to other people

• Using multifactor authentication, like entering a PIN or password

• Keeping a close eye on account activity

• Securing your cards, PINs and receipts with sensitive information

• Properly disposing of old cards

And Capital One customers have access to additional fraud protection tools.

Here are the answers to some frequently asked questions about EMV chip technology:

EMV chip technology can help reduce the risk of credit and debit card fraud. That’s because EMV chips are more secure than magnetic stripe cards. They’re also harder to counterfeit and require stricter authentication for each transaction.

Learn how debit and credit card fraud protection works, and what you can do to better secure your financial information.