The Age Of The MasterCard Chip Card

Have you been issued with a chip card?  A ‘chip’ is a microchip that is embedded into credit and debit cards, replacing the use of the magnetic stripe.

The chip is a small computer processor with memory, logic and a configuration of software applications and is being embedded in plastic MasterCard cards, amongst others.  Although most credit card holders do not realise it, these chip cards have the capacity to hold more information and they have much higher security features compared to the older style existing magnetic stripe cards.

Using a MasterCard chip card

At present there are not a lot of changes for you to understand as they do get used in the same way as the existing magnetic stripe card does, just swipe and sign your authorisation as you have always done. In time there are plans for merchants to upgrade their terminals and when this happens there will be changes to the way you will then use the card.  The changes won’t be dramatic and your merchant will advise you at the time so that you will know how to use the card.

The new process will mean you will ‘dip’ your card into the terminal for the duration of the transaction then sign your authorisation as you do at present.

Consumer benefits of a chip card

Chip cards are a further step in card security.  In time they will have more applications than the magnetic stripe card and are more convenient for use.   The use of the chip card is being introduced worldwide as the way to do credit and debit card business.

• Application diversity – the chip card has the ability to handle multiple payment tasks and most definitely one of the benefits is the better protection against unauthorised use of your card.  Chip card security will allow the merchants to continually upgrade and enhance the card without the need to replace the card because it already has a computer memory in it.
• Upgraded security – magnetic stripe cards allow unauthorised persons to take information from your card for their use but that is not possible with a chip card, so this has proved to be a major security advancement.
• Information storage – the chip cards have the ability to store a greater amount of information and programs that could not be done on the magnetic stripe cards.
• Convenience of a chip card – new applications will keep coming out where the chip card can be used and one such application now is the MasterCard®PayPass, which allows a chip card holder to just Tap & Go the card at certain fast check outs at places such as service stations and convenience stores.
• Switching to chip cards -there are definite benefits.  As with the initial introduction of plastic cards years ago, there is a global change in the payments industry and chip cards are part of it.  Chip cards have already been widely introduced or are being introduced throughout Europe, Asia, Latin America, Africa and the Middle East.

  In Australia as in other countries, chip cards will provide more protection against fraud and there will be more and more contactless payment options offered as merchants upgrade their payment systems to suit.

• When are chip cards being issued – MasterCard chip cards are already being sent out by some issuers.  Generally they are being issued when a new application is approved or when a card meets its expiry date.  Different issuers have different criteria for issuing so if you want more information contact your bank and find out what their policy is.

If you have an existing magnetic stripe card do not be concerned as you will be able to continue using it as usual at all terminals.  The volume of MasterCard chip cards that need to be issued and replaced does not allow for an overnight transition.  These types of changes in the financial industry do take several years to become fully effective.

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