TL;DR
Chip and PIN cards are much more secure than older mag stripe cards because they use dynamic data for each transaction, making them harder to clone. While mag stripe cards still work, you should always prefer using chip and PIN or contactless payment where possible.
Understanding the Difference
- Mag Stripe Cards: These store your card details on a magnetic strip. When used, this data is read and sent to the bank for approval. The information remains static each time you swipe.
- Security Risk: Easily copied (skimmed) by fraudsters using simple devices.
- How it works: A reader passes a magnetic head over the stripe, reading the encoded data.
- Chip and PIN Cards: These have an embedded microchip that generates a unique code for each transaction.
- Security Risk: Much harder to clone as fraudsters need to replicate both the chip *and* the dynamic security code.
- How it works: The chip communicates with the card reader during insertion, creating a one-time use code. You then enter your PIN to verify you are the legitimate cardholder.
Why Chip and PIN is More Secure
- Dynamic Data: Each transaction creates a new, unique code. Even if someone intercepts the data from one transaction, it can’t be used for another.
- Mag stripe cards send the same card details every time.
- PIN Verification: Adds an extra layer of security – even with a cloned chip, fraudsters need your PIN.
- EMV Standard: Chip and PIN technology is part of the EMV (Europay, Mastercard, Visa) standard, which aims to reduce card fraud globally.
What if a Merchant Still Asks You to Swipe?
- Politely Request Chip & PIN: Most modern terminals support chip and PIN. Ask the cashier to use that method.
- Be Vigilant: If you *must* swipe, keep your card in sight at all times.
- Look for any suspicious activity around the terminal.
- Check Your Statements Regularly: Monitor your bank statements for any unauthorized transactions and report them immediately.
Contactless Payments (Tap & Pay)
Contactless payments also use dynamic data, similar to chip and PIN. They are generally very secure but be aware of the following:
- Distance Limitation: Contactless transactions require close proximity.
- Transaction Limits: There may be limits on how much you can pay using contactless before needing to enter your PIN.
Reporting Fraud
If you suspect your card has been compromised:
- Contact Your Bank Immediately: They will cancel your card and issue a new one.
- Report to Action Fraud: In the UK, report fraud online at Action Fraud.