How does chip credit card work?

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Chip credit cards, also known as EMV cards, have become increasingly popular in recent years. These cards feature a small microchip embedded on the front, which enhances security and reduces the risk of fraud compared to traditional magnetic stripe cards. In this article, we will delve into how chip credit cards work and explore the technology behind them.

The Basics of Chip Credit Cards

What is a chip credit card? A chip credit card is a payment card that contains an embedded microchip. This microchip stores and processes data securely, making it more difficult for fraudsters to counterfeit or clone the card.

How does it work? When you insert a chip credit card into a compatible terminal, the microchip and the terminal engage in a conversation to authenticate the card and authorize the transaction. This process is known as EMV (Europay, Mastercard, and Visa) technology, which sets the global standard for chip-based payment cards.

The Technology Behind Chip Credit Cards

The microchip: The microchip embedded in a chip credit card is a small computer that contains a processor, memory, and cryptographic functions. It generates a unique transaction code for each transaction, making it nearly impossible to reuse the code for fraudulent purposes.

Contact vs. contactless: Chip credit cards can be either contact or contactless. Contact cards require physical contact with the card reader, while contactless cards use near-field communication (NFC) technology to communicate wirelessly with the terminal. Contactless cards offer a faster and more convenient way to make payments, as you simply tap your card on the terminal.

The card reader: To process chip credit card transactions, merchants need a card reader that is capable of reading the microchip. These card readers are often referred to as EMV terminals. When you insert your chip card into the terminal, it establishes a secure connection with the microchip to verify the card’s authenticity and authorize the transaction.

The Benefits of Chip Credit Cards

Enhanced security: Chip credit cards provide an extra layer of security compared to magnetic stripe cards. The microchip generates a unique code for each transaction, making it difficult for fraudsters to clone the card or use stolen data for fraudulent purposes.

Reduced fraud: Since the introduction of chip credit cards, there has been a significant decrease in counterfeit card fraud. The technology makes it challenging for criminals to create counterfeit cards that can be used for fraudulent transactions.

Global acceptance: Chip credit cards have become the standard in many countries worldwide. This widespread adoption ensures that your chip card is likely to be accepted at most merchants globally.


Chip credit cards have revolutionized the payment card industry by providing enhanced security and reducing the risk of fraud. The microchip technology embedded in these cards, along with the use of EMV terminals, ensures that each transaction is securely authenticated. With the widespread acceptance of chip credit cards, consumers can enjoy a safer and more secure payment experience.


– Visa:
– Mastercard:
– Europay: