You may have heard of, or have even received, one of the new EMV® credit or debit cards with a small gold or silver “chip” embedded in it. As of October 2015, U.S. businesses have been migrating to this more secure form of payment. And while you might be surprised to find that you’re required to insert this card rather than swipe it at a Point of Sale system, the benefits you’ll reap far outweigh that bit of extra effort. Here’s why.

What Are EMV® Chip Cards?

EMV® chip cards are credit and debit cards based on a new standard of security for processing digital transactions. They use an open standard set of specifications for payment cards and acceptance terminals — merchants’ keypad point of sale devices. Swiping your old card passed your personal and payment data to the merchant’s payment system using the magnetic strip on the back. These strips were easy for criminals to copy, allowing them to duplicate your information on fraudulent and counterfeit cards. The new merchant systems take a little bit longer to process your payment after you insert your card, but your information becomes encrypted and more secure.

What Does EMV® Stand For?

EMV® stands for Europay, MasterCardTM and Visa® — the three payment and credit card companies that developed the technology.

Who Requires Chip Cards?

Merchants who use one of the new terminals require chip cards, and all U.S. merchants were encouraged to convert their systems by October 2015. Any merchant who is not compliant after that date assumes financial responsibility for fraudulent in-store transactions.

What Makes These Cards More Secure?

Stores with EMV®-equipped card readers use digital data which changes dynamically during every transaction. This makes every transaction unique and therefore more difficult to duplicate. The chip on your card contains embedded microprocessors, which provide strong transaction security features not possible with magnetic strips. This improves security for “card present” transactions — those where you physically go into a store and use your card.

EMV® cards do not help with online transaction security where you type your information into an ecommerce website. You’ll have to take several extra steps to protect yourself from fraud with online purchases. Set up alerts with all your credit card and banking sites so you’ll be notified immediately if your card is used for a transaction where the “card is not present.” That way, you’ll know if someone attempted online fraud with any of your accounts. Don’t wait until your monthly bill comes to review the charges and report a problem.

What Will Happen in the Future?

In the very near future, you’ll begin to see more merchants convert to chip-based terminals rather than magnetic swipe terminals. In fact, some stores have already converted to the chip card system, and other countries around the world have already adopted this technology. The chip-based terminals are safer than the older magnetic swipe cards, and the chip helps protect your information by making it more difficult to counterfeit. You should expect to see more and more of these terminals soon, if not already in the stores you frequent. In fact, most merchant systems in Canada and Europe expect to process cards with the EMV® technology, and a card with only a magnetic strip may not be accepted.

Always watch your transaction records and immediately notify Navy Federal or other card issuers if you suspect any type of fraudulent transaction.

Federally insured by NCUA. Equal Housing Lender.