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Chip Card Help

What is a chip card?

A chip card – also known as an EMV card – is a debit or credit card that contains a microprocessor (or a chip) that enhances the security of cards during point-of-sale transactions.

These cards, already in use in much of the world, use a security standard originally developed by Europay, Mastercard and Visa (EMV) as a way to fight card fraud resulting from theft, skimming and counterfeiting. The EMV technology has been adopted by the other major card brands and issuers.

How does it work?

These cards help protect cardholders and merchants from fraud because the chip gives every transaction a unique code that can’t be used again. This protects against card counterfeiting and makes stolen transaction data virtually useless to crooks that try to use the data to make fake cards or duplicate purchases.

Chip cards are in use around much of the rest of the world already, and have been shown to reduce point-of-sale fraud.

Why now?

  • A liability shift prompted by Mastercard and Visa occurred on October 1, 2015.
  • This shift transfers the burden for paying for some types of fraud from card issuers (like Kennebec Savings Bank) to merchants (retail stores) in situations where those merchants did not have terminals capable of accepting chip cards. Prior to the liability shift, financial institutions held the responsibility for all occurrences of fraud.
  • We have already begun issuing chip cards, and will be doing a rollout based on each current cardholder’s card expiration date. The new cards will arrive in the mail as usual.
  • Customers applying for new cards are going straight to chip cards.

How are chip cards used?

  • Instead of swiping the card through the terminal, a chip card is inserted into a chip-enabled reader and stays in during the full transaction. To verify, a cardholder will either enter their PIN or sign their name.
  • Since not all merchants have chip-enabled terminals yet, chip cards still have a magnetic stripe on the back so cardholders can swipe their new card through older terminals to complete transactions.
  • There are no changes to the way payments are made on the internet or by phone.

How are chip cards used at ATMs?

As a Kennebec Savings Bank customer, you are probably already used to inserting your card at an ATM and keeping it there for the length of the transaction – but you may be seeing this more often at other ATMs now, as a transaction will usually require contact with the chip throughout the entire transaction to ensure proper authentication.

Where can a chip card be used?

Chip cards can be used virtually anywhere debit or credit cards are accepted in the U.S. and around the world. The EMV standard is widely used across the globe, so adding chips to our cards should be very beneficial for traveling customers.

What is the difference between chip-and-PIN and chip-and-signature?

In the U.S., chip cards are designed to accept both PIN and signature methods for verification. The method that is called upon during the course of a transaction depends on the setup of the merchant terminal and the settings on the chip. KSB’s debit chip cards will be designed to be PIN-preferring for added security, but you may choose to sign for your transactions instead if you choose to.

Are all of KSB’s cards chip cards?

Yes, with the exception of our ATM cards, and those that have not yet come up for reissue since we started issuing chip cards in early 2016 (for the time being).

Are merchants required to switch to chip-enabled terminals?

No, it’s not a requirement, but it could be costly for them if they do not, because of the liability shift. If a merchant has not yet converted to chip-enabled readers, and a chip card is swiped instead of inserted (preventing the use of the chip), the merchant could be held liable for the costs of a fraudulent transaction instead of the bank that issued the card.

Are you a merchant and interested in learning more? Call us at (207) 622-5801 and ask about our new merchant services solutions.