Lately, I’ve been confused and maybe you have been, too. Unless you’ve been living in a cave, you’ve probably heard about credit cards with smart chips. You may even have one.

My confusion is the result of technology overload. All of a sudden there’s chip & PIN, chip and signature, RFID, NFC, contact and contactless smart cards, and, of course, Google Wallet.

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A more accurate headline would be: Smart cards not perfect but safer than magnetic stripe cards. You might even choose to eliminate your wallet at some point in the future and pay with your smart phone. Hysteria not necessary.

Then, we also see the headlines screaming “Contactless smart cards are security risks!”

Doesn’t have the same pizzazz, I know. When I got my own contactless smart card in the mail, I decided it was high time to write an article that described in Plain English how contactless smart cards work and whether or not it’s a security risk.

I’m going to briefly explain (no super high-tech stuff!) how a few types of cards with smart chips work so you will understand the basic differences. Forget NFC for now because that’s the technology used for mobile payments, like the kind you can make with Google Wallet.

Contact smart cards

Just so you know, the standards for chip card technology are set by EMV, which stands for Europay, MasterCard and Visa. These are the companies that originally developed the EMV specifications for chip cards. Sometimes, you’ll see smart cards referred to as EMV smart cards.

Contact smart cards are exactly what the name implies. The card has to be inserted into a card reading device to work. The card has a silver or gold-plated square on the front and the microprocessor is right behind that square. When the card makes contact with the reader, the microprocessor chip “talks” to the reader. As they talk, information is exchanged. So that’s how “chip card technology” works.

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Chip and PIN vs. chip and signature

For years, we’ve heard stories about Americans going to a foreign country and in some places, were unable to use their magnetic stripe cards. This is because, in Europe, chip and PIN cards are all over the place. Chip and PIN cards require entering a PIN, just like you do when you use your debit card.

Why You Shouldn’t Fear Contactless Smart Cards (cont.)

Image: gagilas, via Flickr

Between Obama taking a strong stance this week on consumer privacy, and consumers feeling the pain of fraud at ever-increasing rates, many major news outlets have tackled the issue of identity theft and protection recently. Our credit and privacy experts hit the circuit to share their knowledge and arm consumers with tools to protect themselves, visiting the White House, and talking to Bloomberg, ABC News, and MSN Money. Here’s a recap:

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Credit.com co-founder, Adam Levin on Privacy from The White House

Last week President Obama unveiled the Privacy Bill of Rights, and our very own Adam Levin was at the White House to cover the story. He told Bloomberg about how we can’t stop technology from invading our privacy and provides practical solutions for protection for the public and personally for consumers. He explains that this one of the most important topics and concerns of the digital age and everyone should be mindful of privacy protection. @Bloombergnews

[Featured Products: Research and compare Identity theft protection plans at Credit.com]

Consumers’ Top 10 Complaints

Our top in-house investigative journalist and news-breaker examines why identity theft ranks first among consumer complaints. Adam Levin also sounds off about some of the practical reasoning and disturbingly pervasive trends in ID theft. This story also has great expert advice on how to protect yourself from becoming a victim. @msn_money

Is it Safe to Swipe Your Credit Card in a Taxi?

Chris Maag’s identity protection crusade also caught the eye of ABC News, who ran a story about the possibility of ID theft through taxi credit card use. After writer Cory Doctorow noticed a warning sign in a cab alerting customers their credit/debit card information may not be safe, debate raged online whether drivers really wanted to protect their passengers’ information, or if they just wanted to scare them into using cash because it’s easier for the taxi driver to deal with. @ABC

[Related Article: Identity Theft: Are We Doomed?]

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