The chip holds the cardholder data necessary for chip-approved devices to read. The technology behind chip cards is critical in enabling the end-to-end transaction process. Once the consumer inserts their chip card to make a payment, the chip and the card reader exchange information to authenticate the transaction and either approve or decline it. How do chip credit cards work?įor a chip card to work, a payment acceptance device that’s certified with PIN and chip standards is required. The chip provides an encrypted way for payment processors to verify cardholder information. The chip provides an additional layer of security-especially for physical transactions in public spaces like stores and ATMs. The card’s chip contains microprocessors equipped to communicate data safely. A chip card, often known as an EMV or smart card, is a debit or credit card designed with a microchip as well as a magnetic stripe.
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