My Switch to Chip Credit Cards

You have probably seen stories on the security problems with standard credit cards and the push to switch over to Chip And Signature cards. The Target data breach is providing a lot of motivation. After Europe switched to Chip and Pin cards they saw a huge decrease in credit card fraud.

After some consideration I decided to be an early adopter and switch over to a Chip and Signature credit card. There are only a few banks in the US that are offering these cards, although the target for the US switchover is 2015. Because chip cards are required overseas, the available choices are often aimed at travelers. So I applied for a new card and just now received it. In the next week or so I will see how widely I can use it and report back.

Geeky details for those who are interested

I can’t find a lot of technical detail on the chipped cards, but I can do a little reading between the lines. The card contains a computer chip that stores a private code along with the more public card/account number. The chip can also execute an encryption function (probably a one way hash). The reading terminal would likely pass transaction details like the date/time and vendor name to the chip on the credit card, the chip would then compute an authorization code based on the private code and the transaction details. The private code is never communicated to the terminal, only the authorization code is. The authorization code changes based on the cyphered transaction details and is extremely difficult to fake. Because each authorization code is pseudo-unique, the code can’t be reused in a fake transaction. The credit card company also has a copy of the private code, and when provided with the transaction details they can easily generate the authorization code and verify that it matches what the vendor sent.

September 2014 Update

I got my chip card after noticing how many stores around me had the new readers. I found grocery stores, home depot, Target, Walmart, and Subway locations in my area that had the brand new card readers. But while everyone had the hardware, only Walmart has turned it on. It was very disappointing to go to all these locations and find that I couldn't use my card in readers designed for it. I continue to be amazed that a year out from the nationwide switchover most retailers are still so far behind. This is kind of hard for me to say, but here goes. Good job Walmart, thanks for looking out for your customers.