How to understand the new credit cards

How to understand the new credit cards

The credit card industry continues to generate a confusing array of terms. Here's what you need to know about the different types of cards.

The credit card industry continues to generate a confusing array of terms. Here’s what you need to know about the different types of cards:

Magnetic stripe and signature. Sometimes dubbed “stripe and swipe,” these cards have been used in the United States for the past several decades. Customer information is stored in magnetic stripes which are easily duplicated to make counterfeit cards.

Who’s liable for fraud: Banks incurred responsibility for transactions made with counterfeit cards. Retailers were responsible for charges made with stolen credit cards.

Chip and signature. These new cards are better protected against counterfeiting because customer information is contained in a chip that is difficult to duplicate.

Who’s liable for fraud: Retailers who have not installed the new chip readers now incur responsibility for charges made with counterfeit cards. Retailers also continue to incur liability for charges made with stolen cards.

Chip and PIN. Used in much of Europe but still rare in the U.S., these cards replace signature authentication with numerical PINs. Liability remains the same as chip and signature cards.

The term “EMV enabled” refers to cards and checkout systems that are compliant with the new chip technology. EMV stands for “Europay, MasterCard and Visa.”

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