Definition of integrated circuit board
What is an integrated circuit card?
An integrated circuit card, or smart card, is a payment card that uses an integrated microchip to store data in addition to (or in place of) a traditional magnetic stripe. Integrated circuit cards are made of plastic or a similar material and are most often associated with specific credit cards called EMV or chip – & – pin credit and debit cards.
Key points to remember
- Integrated circuit cards contain a chip that stores cardholder information, the most common being EMV or chip and PIN credit or debit cards.
- Integrated circuit cards are primarily used in credit cards and debit cards, but are frequently used in other contexts, such as employee ID cards.
- These cards are a deterrent against identity theft because they avoid using a card’s magnetic stripe, which increases the ease of data skimming for identity thieves.
Understanding an IC card
Integrated circuit cards allow information to be stored on the card itself. A consumer’s information is accessed when the payment card is used in a card reader. Combined with other security measures such as a PIN code or password, the chip enables the secure transmission of personal and financial information.
EMVCo manages the technological standards behind integrated circuit payment cards. These types of cards are also known as “smart cards” because of their integrated circuit chip. Although they were initially used in Europe and Asia, their use has spread to the United States. EMV has become a standard in payment card security technology and has been deployed by financial institutions such as banks and credit card providers.
Although integrated circuit cards are often associated with credit and debit cards, they are also used in a variety of other contexts. For example, employees may be assigned an identity card that they must scan to be admitted inside a secure building.
How integrated circuit cards are used to fight identity theft
Magnetic stripe cards have been frequently duplicated, allowing identity thieves to create copies of the original card, as well as sell account information that they have illegally accessed. Using the chip embedded in a payment card can reduce such fraud because it makes skimming a less efficient way to access account information.
Transactions with an integrated circuit card require that the chip be inserted into the chip reader, if applicable, thus making the magnetic stripe a backup function to be used only when a chip reader is not available. Since fraudsters cannot access information secured by integrated circuit cards as easily as a magnetic stripe, they are unable to authenticate their illicit transactions. Many IC cards also feature a contactless payment method, whereby the chip can be read over a short distance, further eliminating the need for a magnetic stripe.
Due to this anti-theft technology, integrated circuit cards are increasingly used in retail stores as more and more chip readers are introduced to support this form of payment security. Cards usually also include a magnetic stripe to enable transactions to be executed if a chip reader is not available in a retailer’s store.