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The Future of Credit Cards

October 28, 2011 06:08pm  
The Future of Credit Cards
If you have recently traveled abroad, specifically to Europe, you may have noticed a new kind of credit card terminal at checkout counters. These innovations combine the traditional magnetic strip reader with two sensors: a pad for “tap and go payments” and a slot for cards with uncovered EMV chips. 

Since the early 90’s EMV (acronym is derived from the trio (Visa, MasterCard and EuroPay) of processing networks that vaulted the technology’s development) has transformed into the global standard for the majority of credit card and debit card transactions—the United States remains the chief holdout. 

The traditional credit card used in the United States utilizes a magnetic strip on the back that contains an encoded version of the cardholder’s account number. The cards are read by swiping the magnetic strip through a reader. By contrast, the EMV technology reads the information from the card’s micro-chip, which is embedded inside of the card. Instead of raw account numbers, the microchip provides validation codes. 

With EMV standards, it is not necessary to physically swipe the card; instead, the purchaser will simply tap or wave their card near a payment pad. The payment pad will then transmit a radio signal that activates the chip. 

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