The perks of EMV
Unlike risky magnetic stripes, tiny microprocessor chips in an EMV -- or Europay, MasterCard and Visa -- card "generate a new security code every time you use the card," Oxman says. These chips are "impossible to counterfeit," he adds, since a hacker doesn't know what code they are going to generate in the future.
There are two types of EMV chip cards: chip-and-signature and chip-and-PIN. The chip-and-PIN version is considered the more secure of the two, since it requires a personal identification code to verify a transaction. "The PIN is an extra layer," Oxman says.
Some U.S. issuers have added chips to their credit cards so customers won't have problems making payments when they travel overseas. But don't let the chip's mere presence fool you.
"Until we get magnetic stripes off the back of the cards, they're going to be highly vulnerable to theft," Sileo says.
Retailers and financial institutions in the U.S. are currently migrating to an EMV system, and come October 2015, liability will shift to whichever party is sporting outdated technology. Eventually you won't be able to complete a transaction without an EMV card. Of course, even a chip won't eradicate fraud completely.
"(A) chip doesn't do anything to stop fraud online, because we don't have chip card readers in our houses," Oxman says.