Chip credit cards: Do they really protect you from hackers?

Chip credit cards: Do they really protect you from hackers?

The majority of Americans have switched to EMV or chip cards in recent years because banks have shifted to them in order to protect credit card information.

However, 41% of businesses in the U.S. don't have chip card readers.

Winkie’s Toys and Variety prides themselves in tradition and they haven’t changed a lot since opening their doors decades ago.

"53 years we've been here and we really appreciate our customers and we try to work really hard,” Co-owner Beth Stuhlmacher said. 

Stuhlmacher says they may be a bit old-fashioned, but not when it comes to one aspect of their business.

“We may be old-fashioned with our computer system, with our cash registers, and those kinds of things, but not with security,” Stuhlmacher said.

Because of Winkie's high regard towards security, they installed chip card readers back in 2015 when they launched.

The rollout came after a series of hacks on major retailers.

Why is swiping being phased out?

CB58 went to Marquette University cybersecurity expert Thomas Kaczmarek for answers.

He says fraudsters use discreet "skimming devices" to steal your information.

The strips on the back of your card, he says, expose you to criminals trying to steal your information.

Kaczmarek explains why it’s so easy for thieves to steal information off of a traditional credit card.

"Just a magnetic recording of the information on the front of the card,” Kaczmarek said.

CBS58 wanted to know why chip cards are a better safeguard against hackers.

Kaczmarek says it's all about technology.

"It doesn't actually transmit your credit card number,” Kaczmarek explained. “It uses some tokens that have been encrypted using algorithms that encrypt information."

Latisha Allen says she feels a lot safer after making the transition to the chip card.

"I had a lot of situations where my account was always getting hacked and I had a lot of fraudulent activity so that's why I switched locations to a different bank and it seems the chip card is fine because I haven't had any problems yet,” Allen said.

It’s not just consumers who benefit from upgrading to a chip card.

Jeff Commer of Swipeworks, a credit card processing company in Whitefish Bay, says business owners will be on the hook for fraudulent charges if they don't upgrade to chip readers.

"If the equipment is up to snuff within the merchant location and they take a chip card, as a chip card, meaning dipping it into the proper type of reader then the liability falls back on the issuing bank,” Commer said.

One word of caution… If businesses have a chip reader, but still accept the "old school" swipe method, the fraud will fall back on the business.

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