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October 21, 2018

Magnetic Strip and Chip Credit Cards: What’s the Difference?

Here’s a scenario that you play out time and time again. You visit a local store, grab the items you need, and head for the cash register. At that point, you’re asked to swipe or insert your credit card.

While you never think twice about the check-out process, there’s something you need to know: there are many differences between magnetic strip and chip credit cards.

For many years, magnetic strip credit cards have been the standard. However, starting in 2015, things started to change. At that time, many credit card issuers started using an EMV chip.

Despite the fact that it’s been a few years, you may not have any idea of how these credit cards differ and which type is best.

Magnetic Strip Credit Card

With a magnetic strip credit card, all of your account information is stored on the black or gray stripe you see on the back of your card.

Upon swiping your card, the payment terminal uses this information to receive an authorization (or denial). As long as there’s no issue, you can expect your transaction to be completed almost instantaneously.

Magnetic strip credit cards are still in use, but there’s something you need to know: these are not nearly as secure since all of your information is stored in the stripe. In the event that someone hacks into a payment terminal, it’s much easier for them to access your account information.

Chip Credit Card

With the above in mind, credit card issuers came to find that switching to EMV chip credit cards is safer for everyone.

A chip credit card allows the transaction to be processed based on information stored by the computer chip, but not your actual credit card details.

Upon inserting your card to make payment, the system completes the verification based on the information on the chip. The transaction is sent via a token, which changes after every transaction. So, even if somebody does gain access to a payment terminal, the token information is useless.
Depending on the type of credit card and payment terminal, you may be able to pay by simply tapping your card. This greatly reduces the likelihood of forgery.

So, What’s the Difference?

From a convenience perspective, both magnetic strip and chip credit cards are easy to use. However, when it comes to security, an EMV chip credit card is the better of the two options.

With security such a big deal in today’s day and age, it’s only natural for chip credit cards to continue to grow in popularity. It’s fair to assume that there will come a time when magnetic strip credit cards are no longer in use.

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1 thought on “Magnetic Strip and Chip Credit Cards”

  1. I need a credit card for rebuioding my credit score. I was/am a victim of identity theft. Someone got accese to my SSN & opened variou credits using my SSN. Hope you guys can help me get a new start.

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