An Update on Chip Card Technology

I wrote about chip card technology in credit cards almost exactly a year ago. It seems like time for a few updates:

First, I have now received three chip cards. Two have embossed numbers like my older cards and one does not; the numbers are just printed on that one. The embossing was for use in the old “knuckle buster” card readers. In those readers the card was placed on a metal bed and a multi-layer form with carbon paper between the layers was placed on top of the card. A slide was rolled over the form making an “impression” of the card on the form. This had the one advantage that it proved the merchant had the card. For telephone orders, the merchant hand-wrote the information on the form. Each of these approaches were annoying. I haven’t had anyone use a knuckle buster on my card in a while, but the raised name and numbers make the card easier to remove from my wallet…

Second, I notice that all three cards still have magnetic strips. This is good. Even though merchants will have liability for using the strips on the cards, it does mean that they will work in the legacy readers. I still find them when I travel and some people have magnetic stripe readers for taking personal payments, e.g. with the PayPal triangle reader.

Third, my wife received a triangle reader for PayPal that takes chip cards. The reader is the one used by the local arts council for which she is the executive director. The reader fits in the headset jack in the same manner as the old one. That makes it easy to use.

PayPal Here reader chip card technologyUnfortunately, when I’ve used my new chip cards the merchants have only been able to swipe them to read the magnetic strip. I know they have a few months to upgrade and that it will be a while before the restaurant server brings the reader to the table as they do in much of the rest of the world. I also hope that soon we’ll see the system upgraded from chip-and-signature to the more common chip-and-PIN. That will increase security and reduce the opportunities for identity theft. Of course, with cameras at ATMs, gas stations and many street corners, another camera watching for people entering PINs probably won’t be likely to be noticed.

These new cards are supposed to be difficult and therefore expensive to clone. That’s the good news. However, there is a bit of bad news. It seems the payment system is still subject to compromise. The terminals could be compromised or perhaps the information sent from the card to the terminal could be captured. There are also apparent weaknesses in the protocol itself. The point is, the change should help, but it is not a panacea.

Share your chip card technology updates with us and let us know how it’s going for you.

To your safe computing,
John McDermott

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