“Chip” Cards Have Security Gaps

Many credit card issuers are ­finally starting to issue cards in the US embedded with microchips, a security measure used widely in Europe, Asia and Canada. But you’re probably not getting as much extra ­security as chip cards that are issued in other countries provide.

That’s because most US merchants do not yet have devices to read the chips, so you still need to swipe the card using its old-fashioned magnetic strip to process a charge. (Card issuers are prodding merchants to have the devices by October 1, 2015.) That defeats the purpose of the chip, which is designed to generate a secure, scrambled single-use code for each transaction.

In addition, unlike foreign chip cards, nearly all the new US chip cards require a signature rather than a PIN code. That means someone who steals your card would not need to know your PIN code to use the card—either in person or online. (Some major card issuers, including Chase and Target, are expected to begin offering chip-and-pin cards in the US in early 2015.)

However, one advantage that already applies to the US chip cards is that the chips make the cards much more ­difficult to counterfeit.