What is a chip card? Why use a chip card instead of a magnetic card?

Chip card (English: Chip card) is a plastic debit or credit card with the standard size and contains a chip located on the front of the card.

Chip cards
Concept

Chip cards in English have many ways to call such as Chip card, smart cards, chip-and-pin cards, chip-and-signature cards, Europay – MasterCard – Visa (EMV) cards.

A chip card is a standard-sized plastic debit or credit card and contains a chip located on the front of the card. Chip encrypts information to increase data security when making transactions at stores, terminals or automated teller machines (ATMs).

Why use a chip card instead of a magnetic card?
High information security

Magnetic cards have relatively low security, so it’s not surprising that the oldest Skimming devices can steal ATM card information of users, making a lot of customers suffer because the money doesn’t fly … For this reason, we should turn to chip cards for greater peace of mind when withdrawing money or making payments.

When inserting a magnetic card into an ATM and entering a PIN, the information is stored in magnetic strips and will be transmitted as “bare” text, so just a regular scanning device will immediately know the PIN / card number. .. your.

As for the chip card, the above information will be encrypted one more step in the form of a digit string in the binary format of the computer, and this code is constantly changing so suppose the hackers are lucky to decode and get The information is also difficult to reuse …

The principle works closely

Contrary to magnetic cards, whenever a chip card is used for payment, the chip generates a unique and never-repeated transaction code. In case a customer’s card is stolen from a certain store, the fake card will never work because the stolen transaction code will not be reused, the card will be rejected.

In order for a successful chip card transaction, you will have to go through two-dimensional complex verification steps from the device to the payment bank, Mastercard / Visa and the issuing bank. When licensed by all related organizations, the transaction is successful.

The processing of chip cards is a little more complicated than magnetic cards because there is a more Visa / MasterCard organization involved in card verification, the process is closed and circular but it only takes a few seconds to be accepted to request access. access your account by card, not from a lot of magnetic cards.

Banks are offering chip cards
Besides international banks such as HSBC, CitiBank … Vietnamese banks are also on the path of converting all to chip cards. There are many major banks introducing international credit and debit cards with advanced chips such as: VIB, VietinBank, VietcomBank, Techcombank, ACB, Sacombank … In the future, surely all banks must convert. to Chip card for customer security and safety.

Some notes when using chip cards

Do not withdraw money at ATM outside the system because the fee is very high (4% / amount, at least VND 50,000); Only transfer within the system via ATM; Chip cards are international cards, so they can be purchased online, used globally. You should also delete the CVV number on the back of the card; The annual fee is only VND 30,000 higher than the card depending on the bank.

Most customers are using domestic debit cards (known as ATM cards), which are magnetic cards. Moreover, it is mainly used to withdraw money at ATMs, which is the place where hackers can easily hack the card information, so switching to chip cards will be much more secure.

(Reference: thebank.vn, investopedia.com)