We have entered into the era of digital payments. It’s hard to find someone who doesn’t owe a debit or a credit card. But have you ever wondered about the tech that goes into it? How does a simple plastic card help us manage our payments? It’s not just the debit cards if you ever take a membership of a game zone or a grocery outlet you might have got a card that keeps track of your reward points. So how does all of these exactly work? In this article, we shall look closely at how the chip card technology works.
What is a chip card?
Originally euro pay, master, and visa came together and invented the chip card which they called the EMV card. The main purpose and advantage of using this are to avoid counterfeiting of the physical currency. The advantage is that in this technology the data is encrypted on your card. The authentication code which is used when you process the payment is changed with each transaction. Hence even if someone can crack your code it will be of no use. Hence this card system provided convenience and safety.
How does the chip card work
If you look closely there are three different ways you can carry a transaction. First and the most modern one is a contactless payment where you simply tap your card at the reader. The second most preferred method is processing the payment through the chip. That golden chip you see on your card contains all the information required to process the transaction. It is this method in which the code changes every time. Finally, in the end, the old method is through the magnetic chip. The black strip on one of the sides of the card is what the magnetic reader reads in the machine. One major disadvantage of using a magnetic strip is that it does not change its authentication code after every transaction.
So when you insert your card into the machine it’s the chip which communicates with the machine. Based on the bank there will be an authentication method that will pop up. Usually, it is the PIN. On entering the PIN the transaction is processed.
Safety and reliability
Even though the chip cards are well secure no technology is safe by 100%. There are changes in human error as well. Also, many banks don’t use authentication methods. This means if you insert your card into the machine it directly processes without the need of a PIN. This card technology has helped to overcome physical note counterfeiting.
Another point to consider here is the reliability. Today globally no matter where you go almost every shop and place does have a card machine. This gives the customer the freedom and convenience to carry just one card which works globally.
Future of chip card
Digital payment has seen a major jump in the last few years. To be more specific there has been a significant increase in contactless payment. Many applications such as Google Pay allow you to add your card details to your account and then use NFC technology to pay by contactless payment. The future is contactless payments and eventually, the chip card technology will become just the history.