EMV Chip Credit Cards In the United States

Credit card fraud is the most common form of identity theft and can happen in many ways. Most people think credit card fraud happens when someone steals or finds a misplaced card and uses it for unauthorized transactions. However, skimming is another common type of credit card fraud — a practice where scammers add devices to credit card terminals that capture cardholders' data when they swipe their cards, allowing thieves to create counterfeit cards.

The U.S. has the highest rate of credit card fraud, accounting for over a third (35%) of global cases in 2018. To combat skimming and other types of credit card fraud, American retailers and financial institutions have switched over to EMV, a secure technology that many other countries adopted decades ago. New rules — introduced by banks and payment processing networks in 2015 — have promoted the adoption of EMV technology in the U.S., as merchants without EMV chip readers are now liable for fraudulent transactions.

In this guide, we'll delve into EMV chip technology, how it works and what to know about fraudulent transactions.

What is EMV technology?

In recent years, EMV chip cards have overtaken magnetic stripe cards, comprising 83% of transactions worldwide.

The main difference between EMV cards and magnetic stripe cards is the way account information is stored. Magnetic stripe cards hold information in the stripe itself — the magnetic stripe needs to be swiped for the card reader to process this data. In contrast, EMV cards have microcomputer chips that create a unique encrypted code each time a card is inserted into a payment terminal, making it much more difficult to counterfeit.

Chip-and-signature vs. chip-and-PIN cards

An EMV card can either be a chip-and-signature or a chip-and-PIN card — or come with both capabilities. The card issuer determines which functionalities the credit card will come with. Both varieties come with the EMV chip and are both "dipped" into a card terminal rather than swiped. The differences lie in how the transaction is completed.

Chip-and-PIN cards are notably more secure, since the PIN provides an extra layer of security in case the card is lost or stolen. Across the globe, you'll find that chip-and-PIN cards are the standard; currently, though, this isn't the case in the U.S. Most merchants only require chip-and-signature cards, as they're much more convenient than entering a PIN at checkout.

However, payment processing companies like PayJunction predict that chip-and-signature cards will eventually be phased out for two reasons: First, chip-and-PIN cards offer enhanced security — and there are numbers to prove it. (For example, the U.K. has required chip-and-PIN cards since 2006 and has cited between 2004 and 2014 a reduction of over £80 million in credit card fraud.)

Second, chip-and-PIN cards are the standard globally — therefore, U.S. consumers may find that their cards with just chip-and-signature may not be accepted at certain merchants while abroad, such as automated payment machines that cannot collect signatures for transactional proof.

Best EMV chip credit cards for travel

Virtually all cards in the U.S. come equipped with an EMV chip. Therefore, you'll want to own a card that offers other travel benefits and top-notch security features.

As mentioned earlier, your card will likely only support chip-and-signature at this time. At this time, Bank of America and Barclays are the only major U.S. issuers that offer chip-and-PIN capabilities on their commercial cards. Since the PIN is optional, you'll have to activate it through your card issuer before you travel. Still, chip-and-signature is the preferred method on Bank of America and Barclays cards, and the POS system will only ask for your PIN if required.

We looked at cards from Bank of America and Barclays and picked those that are EMV chip-and-PIN-ready travel rewards credit cards. These cards could be ideal for your international travels, with annual fees under $100, $0 fraud liability protection and excellent rewards programs.

In countries where chip-and-PIN is the norm, you should still be able to use your chip-and-signature card with no problem. The only scenarios where your chip-and-signature card may not be accepted is at automated payment machines, which will require a PIN to complete your transaction. In this case, it's best to pay with a debit card or with cash instead.