The widespread adoption of EMV chipped "smart" cards, and their related point-of-sale (POS) card-reading machines, means you will be paying for things in stores a little differently. Some things about retail payment will remain the same, though, even with the release and adoption of new cards.
Just what are the differences between "dipping" and "swiping" and "tapping" your cards using near field communication (NFC)?
That new card you received recently from your bank looks pretty much like the old one. Same size, same type of plastic, same magnetic stripe on the back. Except is has that metallic transistor-looking square on the front that clues you into a major difference in how it functions.
This is an EMV-compliant card, meaning it comes with an embedded data chip (the metallic transistor-looking square) on the front.
The EMV chip adds transaction verification and security features. It changes the way you use the card to make in-store purchases, but only if the merchant has installed the matching POS readers.
EMV readers have a terminal slot that is the width of your card where you will be "dipping" your card. "Dipping" is more than just inserting the card in the right slot; it's also waiting long enough for the transaction to process. This tends to take longer than "swiping," as the information on the card is dynamically produced, meaning it is different each time you “dip” your card. If you pull out early the transaction may get held up, and you’ll have to “dip” again.
Most EMV cards come with the magnetic data stripe we're all used to seeing on the non-chipped cards. The data stripe makes a return appearance because:
• Not every merchant is ready to accept EMV cards
• A growing number of merchants use handheld card swiping, often outside traditional retail settings.
• EMV card readers, and matching cards don’t always work as promised.
In other words, the magnetic stripes are there for what's known as "backward compatibility,” the ability to use the previous technology, just in case.
You may already be tapping your smartphone for payment in some stores as the trendier shops and cafes begin to transition to this new payment system. Even McDonald's has become hip to the new technology, called near field communication. NFC is a set of communication protocols that enable two electronic devices to talk to each other at close range (within approximately two inches).
What works for your smartphone also works with EMV cards, assuming the card reader has the right technology. Just look for the NCF tapping icon - both the POS reader and the card will have the icon. Tap your card where it says to, and wait for your payment to complete and be verified.
In addition to swiping, two other tried-and-true features of credit and debit card payment will hang around a little longer: signing or entering a personal identification number (PIN). Use of either in the "new payment environment" depends on which one is part of your card verification set-up, and the degree to which the new technology works as intended.
Even though there’s a new type of payment system on the block, your swiping card will stay put for the time being.