Introducing Chip Cards
What is a chip card?
A chip card, sometimes referred to as a “smart card”, is a credit or debit card containing an embedded computer chip, which gives the card the ability to store and process data. The chip card provides enhanced security, because it is very difficult to duplicate.
Why chip? Why now?
Although there are many benefits for migrating to chip technology — such as greater convenience at point-of-sale and faster transactions — the industry’s decision to make the shift in Canada has been predominantly led by substantial increases in counterfeit and fraud activity. Chip cards will provide added protection against unauthorized use of Member cards. While traditional cards already operate with sophisticated security and fraud protection systems, chip cards have the capacity to enable greater security.
The shift to chip cards is part of a global progression in the payments industry. Chip cards have already been widely implemented in Europe and Asia, and are being introduced in Latin America, Africa and the Middle East.
What are the benefits of the chip card?
Consumers have a lot to gain from the migration to chip technology.
Benefits include:
Added security: Chip cards provide additional protection to avoid disclosure of personal information and are very difficult to copy.
Added convenience: Greater speed and convenience at the point of sale.
Chip represents the highest level of security available to protect payment information and prevent fraud. While no technology is 100 per cent invulnerable, chip cards employ a range of security features and measures that work in concert with each other to create a multi-layered defense against fraud. Regular testing of the systems and the technology assure the highest level of security.
Are all financial institutions migrating to chip?
Each payment card company has set out individual timelines for migration and the timelines for each of their respective members (banks, caisse populaire, etc.) will vary as well, but eventually all financial institutions will migrate to the use of chip or smart cards.
When will chip cards be in the marketplace?
Members of the Canadian payment card industry, including CUETS, will be conducting a chip trial from October 2007 to March 2008 to allow participants to test the infrastructure and ensure interoperability of contact EMV technology and chip-related systems and devices in a controlled manner prior to each participant’s national roll-out plan.
CUETS’ chip project is on track to participate in the trial, providing an opportunity to test from a MasterCard® perspective, our technology, operations, processes, marketing and communications. This participation will provide CUETS with an early understanding of the possible challenges or opportunities that will face the credit union system when a national rollout occurs in late 2008.
By the end of 2010, it is expected that the majority of cardholders and merchants will be able to fully benefit from this new technology.
For more information visit one of the sites below.
www.choicerewards.ca/chip
www.cuets.ca/chip101/chip101.html
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