A chip card doesn’t guarantee greater security

So you think your electronic payments are now more secure because your bank sent you a credit card or debit card that has a computer chip in it? Think again.

Getting a chip card solves only half of the puzzle when it comes to heightened security. That’s because the chip isn’t any good unless a merchant has upgraded check-out terminals to accept the new technology. Currently, both banks and retailers are scrambling to make the transition.

The new cards are more secure than plastic with a traditional magnetic strip because the small square computer chip embedded on the front creates a unique code for each transaction.  By contrast, the magnetic strip contains static data such as card account numbers. The result: The new cards make it harder for crooks to make counterfeit cards that can then be used to charge fraudulent transactions to your account.

But even if you have a chip card, the new security coverage won’t work unless the merchant can accept it. In many cases, at least for now, you will have to use the magnetic strip that is included along with the chip on the new generation of cards.

So far, not many merchants are advertising that they have the new equipment to accept chip cards. Among the big-box retailers, Wal-Mart Stores says all of its terminals are upgraded. Target, the subject of a massive breach in late 2013, has upgraded its terminals, but won’t start accepting chip cards until the late spring.

It’s easy for even a non-tech-savvy consumer to tell if transactions are chip-enabled. An upgraded terminal will require the shopper to slide the card into a slot at the bottom rather than swipe it down the side. A dipped card must also stay in the machine for the duration of the transaction.

If you try to swipe a chip card at a merchant that has the new technology, you will be prompted to dip instead. Conversely, if the merchant isn’t ready to accept your chip card, you will have to swipe it the old-fashioned way.

As for paying at the cash register with a mobile phone or a swanky new Apple Watch, which also offers enhanced security, chances are that you will have even fewer opportunities to do that right now.

The mobile payments require a different type of technology at the cash register, called near-field communication. The new terminals that accept chip cards often come with the NFC technology, which lets the shopper hold the device up to the terminal. But many merchants haven’t yet turned it on to accept mobile payments.