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We answer 7 popular questions about those chip cards

More than 600 million chip cards have been distrubted since October 2015.

Last month, we reported on chip credit cards and why some stores still aren’t accepting the new technology. After the article ran, we got a lot of questions from readers about their chip cards and how they work.

One burning question: After so much chatter about an Oct. 1, 2015 date -- which marked a change in the way credit cards are processed in stores -- there are still a lot of retailers not yet on board with the new procedures, not to mention many folks who still have their old magnetic-stripe cards.

We hope some of these answers clear up the mystery around chip credit cards. Let us know if you have others by emailing us here.

Q: Why haven’t all banks introduced chip debit and credit cards? I have received a new debit card within the last 3 months and it is not chip enabled. — Anthony

So far, nearly 600 million chip cards have been issued. Visa has issued 240 million chip cards to their customers and MasterCards says that 67% of their cards have been issued with chips so far. Still, it’s not mandatory.

“There is no requirement that a retailer accept new chip cards and it’s not required that banks issue them,” says Mallory Duncan of the National Retailers Federation (NRF).

In other words, if your bank hasn’t issued you a chip card, they have decided, for whatever reason, that it’s not a priority right now.

Q: I don’t see how a chip debit card is more secure for me. If someone steals my card he can use it successfully on a machine with a chip reader because he doesn’t need to know my PIN number. — Keith B.

 You’re right, chip cards don’t prevent a stolen card from being used. What makes chip cards safer is the fact that they put up a better fight against counterfeit fraud. According to CreditCards.com, 31.8 million U.S. customers had their credit cards breached in 2014. And that’s because the magnetic strips are very easy to skim.

“Remember when we used to record music on a cassette tape, and then you could re-record over it?”Jason Oxman, CEO of the Electronic Transactions Association, says. “In the same way, criminals record stolen numbers from magnetic strips onto new cards and then use them at retailers.”

An EMV chip cannot be skimmed because it generates a unique one-time code for every transaction.

Q: I was "forced" to use my card in a chip reader a few weeks ago. I asked the checkout person why I couldn't swipe my card. She assured me that the chip reader was more secure. So I asked her if the chip reader would prevent someone from using my card in the chip reader if it was stolen. She just looked at me blankly. I would feel the chip system was more secure if it required a PIN every time I used it. — Constance

There’s a debate going on about the use of PINs along with chip cards right now. The chip credit cards being issued in the U.S. are all “chip and sign” cards. This means that after you insert your card into the EMV reader, you’ll be asked to provide your signature, but you won’t be asked to enter a PIN number. If you’re using a chip debit card, you will sometimes be asked to enter your PIN; other times, you’ll be asked to sign.

According to Oxman, the reason chip cards require a PIN in Europe is because there was no online infrastructure to authorize payments when they started using them. So customers would authorize the payment offline by entering their PIN. When a chip card is used in the U.S., that chip connects with a massive online network where your bank is able to verify and authorize payment almost instantly.

That’s why Oxman says a PIN isn’t really necessary. He also says it would be a strategic nightmare. “Two-thirds of U.S. merchants don’t have PIN pads (like restaurants or cafes), so there is nowhere to enter a PIN number even if you had one,” he says.

With that said, the NRF says PINs would make chip cards even more secure, and it hopes the U.S. will adopt them. “Our long-range goal, before we go farther down this road, is to make the cards chip and PIN,” says NRF spokesman Craig Sherman. “It will make them more secure. You can’t just lock the front door and leave the back door open."

Q: Are gas pumps going to be required to have chip card readers -- since this is where a lot of card information is stolen from? — Joe K.

First, merchants are not required to install EMV machines – but if they don’t, they’ll assume liability in the event of credit card fraud.

While the majority of retailers experienced the EMV liability shift in October 2015, gas stations have until October 2017 before the liability shift applies to them. Unlike merchants, replacing the payment terminals at the pumps is a very expensive process, so gas stations were given extra time.

But once you go inside the gas station, it’s a different story. “The pump may not be upgraded, but the store that’s inside is treated like a regular merchant and should be EMV enabled,” says Duncan.

Q: I've seen the commercials on TV trying to sell wallets with the claim that the chips cards emit an RFID signal constantly which can be picked up and stolen. If true, what can a person do about? — Jan R.

The vast majority of EMV chip cards in the U.S. are “contact” EMV cards that do not have wireless capability built into the card. If you have one of these cards, then you don’t have a RFID signal and your information can’t be swiped.

But if you’re one of the few consumers who have a “contact-less” card – which works by tapping the card on the credit card reader rather than inserting it into the machine – then your card does have RFID-like radio capability, says Oxman.

Contact-less cards have a wireless logo on the card. But even if your card does have RFID capability, the chances of it getting swiped are slim. “A thief would need to touch a radio device within a few centimeters from your card in order to read it.” says Oxman. “It’s highly unlikely to happen.”

Q: I have an American Express chip card. The store tells me that I will need to use a PIN number when I use the card. I don’t have a PIN, so I called American Express. They told me I don’t need any PIN and that the store is wrong. But the store still says that American Express is wrong. Where can I get proper info? — Ed S.

American Express is right. “Any retailer that accepts American Express chip cards in the U.S. must allow its customers to use the card without a PIN,” says Oxman.

Q: The big problem for me as a small businessman is that the chip cards won’t ring up as debit. The merchant fee is much more on credit cards than debit cards (or credit cards that can be rung up as debit.) I called my credit card processing company, Elavon, and they said it was the banks that are causing this and there’s nothing they can do. Of course they are raking in millions in fees by the cards not ringing up a debit, so what do they care? — David W.

If you present a chip credit card to a merchant, the transaction will be routed over the appropriate credit network (Visa, MasterCard, etc.) by the merchant’s processor.

But debit cards are a little more complex. Debit cards run over more than a dozen independent networks (some are PIN debit networks and some are signature debit networks), and merchants are entitled by law to choose at least two different networks when they route debit transactions from their stores.

So, if you’re a small business owner who previously chose to incur smaller fees by running credit cards through a debit card network, that is no longer necessarily an option with a chip cards.

“The chip credit card may not be programmed with debit network routing options (called an application identifier), and therefore the chip terminal would not be able to read those options and select a debit network,” says Oxman.

Do you have a question about chip credit cards? Email us at yfmoneymailbag@yahoo.com.