How chip cards work and how they can help you

Credit and debit cards with chip technology are becoming the global standard because of the added security they provide. If you haven’t already received a chip card from your bank, you probably will soon. To understand how it works, and how it protects you, read on.

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What is a chip card?

A chip card is a standard-size plastic debit or credit card that contains an embedded microchip as well as the traditional magnetic stripe. The chip is placed on the left-hand side of the card. It creates a unique transaction code that can’t be used again.

How it protects you

The chip encrypts information to increase data security when making transactions at a chip-enabled terminal. The chip card system will generate a unique code specific to your purchase that cannot be used again. Criminals would be unable to use this code for another purchase.

How it works

  1. Insert your card face up.
  2. Verify as you normally do—sign your name or enter your PIN.
  3. Remove your card once your transaction is complete.

Chip cards have become standard in Europe, Asia and Canada, significantly reducing fraud. More stores and restaurants in the U.S. are accepting chip card transactions every day.

If a chip terminal is unavailable, or a merchant does not accept a chip card, just swipe your card.

Chip credit cards provide stronger security at chip-enabled terminals to help protect your information. Read more about how chip cards work.

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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