Credit card fraud is a serious problem in Canada. In 2013, over 693 thousand accounts were the victim of credit card fraud, with an average loss of $671 per account (Source: Canadian Bankers Association PDF). With the widespread adoption of Chip-and-PIN credit card technology, it has helped reduce domestic credit card counterfeiting by more than 23% from 2012 to 2013 (Source: Canadian Bankers Association infographic).
While Canada has been fast to adopt Chip-and-PIN technology the U.S. is lagging behind. MasterCard and Visa recently renewed their efforts for widespread adoption of secure Chip-and-PIN technology in the U.S. after a number of high-profile breaches. Target has moved up plans to roll out Chip-and-PIN technology after one of the biggest credit card breaches in U.S. history. In Canada, most retailers already offer the benefit of Chip-and-PIN technology at point of sale terminals, providing Canadian consumers with an added level of fraud protection.
Why Chip-and-PIN is More Secure than Swiping
Chip-and-PIN credit card transactions are a lot more secure than traditional magnetic stripe transactions. When you make a purchase with your Chip-and-PIN credit card, a one-time code is created that moves between your card’s chip and the retailer’s point of sale terminal; the data is useless except to the parties involved.
Credit card skimming remains a major concern for credit cardholders. Last year, U.S. retailer Target was the victim of a widespread skimming attack when 40 million credit card and debit card accounts were compromised. Once the fraudster has your credit card information, they can copy it onto a bogus card and begin racking up charges at your expense. While traditional magnetic stripe credit cards are easily cloned, Chip-and-PIN credit cards are nearly impossible to duplicate.
The Advantages of Chip-and-PIN
Not only are Chip-and-PIN credit card transactions more secure, they’re completed in less time. When you make a purchase with a traditional credit card you’re required to sign a receipt. With a Chip-and-PIN credit card instead of signing, you quickly enter your PIN into the keypad of the point of sale terminal.
If your credit card is lost or stolen, you don’t have to worry as much about a thief going on a shopping spree on your dime. Similar to your debit card, your PIN must be entered every time to authorize transactions. However, it’s still important to protect your credit card, as fraudsters can swipe your credit card at retailers who don’t yet have chip-enabled point of sale terminals and can still make purchases online.
How to Use Your Chip-and-PIN Credit Card to Make Purchases
Using your Chip-and-PIN credit card is quick and easy – it’s a lot like making a purchase with your debt card. Instead of signing a receipt you’ll be asked to enter your PIN into the keypad.
Chip-and-PIN transactions are completed in three easy steps:
- Insert your Chip-and-PIN credit card into the point of sale terminal; do not remove your card until the transaction is complete.
- The total amount of your purchase will be shown on the keypad display. To accept the transaction, enter your PIN on the keypad.
Tip: Similar to your debit card, it’s important to keep your PIN safe from prying eyes. You should cover your hand when entering your PIN and shield the point of sale terminal with your body from onlookers. Never share your PIN with the cashier; ask them to pass the terminal directly to you to enter your PIN.
- If your PIN has been correctly entered, the display will show that your purchase has been approved. The cashier will hand you your receipt and the transaction will be complete.
Tip: Don’t forget to remove your credit card; it’s a lot easier to forget your credit card behind in the point of sale terminal since you have to physically insert your credit card.
The Bottom Line
Credit card fraud is a multi-million dollar problem. As a credit cardholder it’s your responsibility to do everything possible to protect your information. Today most retailers in Canada offer the safety and security of Chip-and-PIN technology. Although Chip-and-PIN is a lot more secure than swiping, it’s still important to be vigilant and watch for skimming devices to avoid falling victim to fraud.