Many of us have or will soon receive new credit or debit cards containing microchips.
The transition to cards with chips is occurring since they are more effective in preventing the creation of fraudulent cards.
The Federal Deposit Insurance Corp. discusses the transition in its Summer 2014 "Consumer News" article, "What’s This Computer Chip Doing in My Credit Card?"
According to the FDIC’s David M. Nelson, a card chip changes “the encrypted numbers for every transaction to ensure the authenticity of the card each time it is used.”
The approach is not perfect. Consumers still need to protect themselves, the FDIC notes, "against fraudulent purchases made with your card online, over the telephone or by mail" where no reading devices are used.
Also, the FDIC reports that some credit card companies may require future use of pins for credit card transactions to provide better protection if a chip card is stolen.
New credit card payment terminals will be used, although, at first, your chip card may also contain "the conventional magnetic stripe on the back" to provide for use at terminals that have not yet been upgraded.
If you plan to travel to Europe, the FDIC suggests you request a chip card from your card company, since "many European merchants no longer accept magnetic stripe cards."
For more information, visit www.fdic.gov/.
Opinions are solely the writer's. Joseph Pellicciotti is a lawyer, professor and vice chancellor at Indiana University Northwest.