New chip cards could help retailers prevent credit card fraud

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KANSAS CITY, Mo. -- Stung by recent huge data breaches, retailers and the credit card industry are putting new technology to work.

It comes in the form of a new chip on your credit card -- and a new card reader at the store -- in hopes of protecting you from being ripped off.

Now some retailers are beefing up security.

"I don't want my identity stolen, I don't want people messing with my credit," said Nanette Park, a credit card user.

"I don't want to go through that all the time," added Craig Patton, another credit card user.

Customers who rely on credit cards are fed up with fraud.

"With a regular credit card that you have today, you have that black strip on the back which contains all of your information, a simple swipe gives the machine swiping it all the information it needs," said Mario Urquilla, the assistant vice president of community development for Enterprise Bank and Trust.

Urquilla says crooks have designed equipment to steal the information off your card, but thanks to something called 'chip cards' or EMV cards it will be a bit tougher.

"With the EMV it eliminates that strip, thus limiting the opportunity for someone to copy your credit card information," said Urquilla.

EMV stands for Europay, Mastercard, and Visa, the three companies that developed and set standards for a chip card. The cards include a microchip that creates single-use codes for every transaction instead of relying on the card number, making the data useless if it's stolen.

"Without the need of a strip or any type of direct communication, it's almost like a bluetooth," said Urquilla, "It will eliminate someone being able to copy your card through the strip."

Walmart is the only major retailer currently accepting chip cards in stores.

"This will give consumers a new level of confidence when they go out to use their credit and debit cards," said Jana Castanon, CFE, the director of financial wellness for Two West Advisors.

She says this new technology should help with fraud, but nothing is fool-proof.

"Consumers still need to be watching their statements diligently, and looking for transactions on there that might be fraudulent in nature," Castanon cautioned.

Only a few banks are issuing chip cards to customers, and primarily to people whose card was lost, stolen, or expired.

"In Europe, when they introduced it, it reduced fraud by over 60%," said Urquilla.

"It is a secure thing, and I feel better now," said Patton.

For more information, please click on this link. 

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