In response to cyber security breaches at major retailers like Target and Home Depot, banks are introducing a new way to keep cardholders’ information safe. LuAnne Whewell, of First Merchant Bank, said the new chip cards are “a step forward in safe and reliable debit and credit card payments.”
The new cards use an embedded microchip that generates a unique, one-time code to approve the transaction each time you make a purchase. Whewell said this process makes it “virtually impossible for a hacker to access and/or reuse your account information.”
Before the chipped cards, cardholders’ information was only protected by the magnetic strip on the back of the card. Cardholders now insert their cards into a terminal when making a purchase instead of swiping the magnetic strip.
When chips are used properly, Whewell said the chances are minuscule that someone’s information can be stolen.
“Chip cards offer a new layer of protection,” she said. “The unique information in each transaction makes it impossible to replicate.”
While Whewell said First Merchant Bank does not require cardholders to switch to the chip cards, Chase Bank has made it mandatory for cardholders to make the switch.
“I got a letter in the mail saying to go get a new card with a security chip, and the old card would no longer work,” said Chase cardholder Aaron Miles, 26.
Miles has been banking with Chase for five years and says he appreciates the bank’s efforts to further protect his information.
“It’s good to see the bank’s technology is upgrading with time,” said Miles.
Miles said he thinks local businesses are adjusting to the new change well.
“Nearly all of the businesses in my area have already started accepting payments with the chip cards. I haven’t had any problems,” he said. “It’s scary to think your identity can be stolen from making a purchase. I am glad they nipped the problem in the bud.”
A 2012 MasterCard Data and MasterCard Advisors Analysis revealed as usage of the chipped cards in stores increased, not only did counterfeit fraud significantly decrease, but also other types of fraud showed signs of decline, including card-not-present and lost and stolen cards — which is why many banks are switching over to chipped cards.
“First Merchants supports the change and believes the embedded microchip on the card makes an already secure card even safer,” Whewell said.
Many cardholders agree.
“Anything they can do to improve the security of my information makes me happy. It lets me know (banks) care,” Miles said.
Whewell mentioned the more than 80 countries that have started using the chipped cards have seen significant reductions in counterfeit card usage.
“Standards have saved hundreds of millions of dollars from being stolen,” Whewell said.
