I have been reading up on these cards recently. Anybody else? SMCC started this thread about a year ago.

The "embedded chip" cards are referred to as EMV cards as well as Chip & PIN cards (Not to be confused with the Pay Wave/Pay Pass/Express Pay contactless cards). They were marketed here in the States starting in 1999 as Smart Cards; however, they never took off and were discontinued. Essentially, instead of a magnetic strip on the back of the card, these cards have a computer chip that contains the card information and approval codes. The cardholder places their card into a reader (similar to the Target card readers) and then they enter a 4 digit PIN to approve the transaction. These cards are nearly impossible to counterfeit and even more difficult to use in a face-to-face transactions (known as a POS 90 charge) as opposed to an online or telephone charge (known as MOTO).

Almost all industrialized countries have adopted the EMV technology; including recently, Canada. Yet the United States is slow to adopt the technology....That could be changing. Chase and Wells Fargo are beginning to issue EMV cards to their top tier cardholders that travel abroad due to the fact that US customers are having a hard time getting their US issued credit cards accepted in Europe. The United Nations Federal Credit Union (UN FCU) introduced an EMV Visa last year and State Employees Credit Union (of NC) will start to issue ALL of it's Visa Debit cards with EMV technology starting later this year. The real problem is getting merchants to upgrade their terminals to accept EMV cards....I would think that merchants, banks and acquiring banks would want to share in the cost of converting...the savings from reduced fraud would pay for the new terminals tenfold.

I would assume that with Chase and Wells issuing the EMV, Amex and Citibank won't be too far behind and then other banks and credit unions. I love the idea of the EMV cards-as long as I can choose my own PIN.

Apple may be developing a SIM card for cell phones that includes RFID technology. Comparable to American Express' Contactless checkout.

RFID has also become a useful tool in time management.These chips also have the capability of opening doors automatically and logging onto computer networks once identity is confirmed.

What I need more info on is the security issue. Now my understanding is that when you "park" the card in the terminal that a "unpredictable" number is generated and sent with an online transaction (if warranted). If the transaction is approved "offline" then no such number is generated. My thinking wanderer is the thief would have to somehow be able to decrypt the scripts contained within the chip where the terminal would approve all transactions offline where the transaction isn't recorded until the next online transaction takes place.

You have to admit though Wanderer, Chip processing is cool !

My old Fleet Visa from 2002 had a chip and when Target first introduced their Visa it came with a chip. I believe I had to purchase a special reader to hook up to my computer so that I could it on the Internet safely. I don't remember the details but it seemed fussy.

smcc - yes I do agree the "chip" is pretty cool. The conversion from "magnetic strips" to "chips" according to my readings is a major expensive undertaking. Whether the United States will undertake such a change is up for discussion. Originally, the inducement to change was better security but computer gurus have figured the "chip" out so the advantage has disappeared from a security stand point. Next worldwide compatiability. You see how well the "metric system" vs the "standard system" conversion has gone forward (not).

You have to admit though Wanderer, Chip processing is cool !

smcc - saw that story and read one about a month ago explaining the ongoing security problems they are having with the chip. It has not proven to be anymore secure than the magnetic strip. Therein lies the problem. Change the US and gain nothing in security! What to do?

All:

Chip cards never caught on here (Remember when AMEX tried), nevertheless its the rage in Europe / Canada because before this technology came about, security across the pond wasn't very good and fraud was rampant. Although the Magnetic Stripe is the preferred choice here in the states, the below article is a wake up call:

http://www.usatoday.com/money/perfi/credit/2010-06-01-1B_travelcreditcard01_ST_N.htm