Tech Explained: The small chip found in the debit card is a mini computer, this is how it works..

While using a debit card or ATM card, you must have seen a small chip. But, do you know what it is for and what it does? The shiny small square-shaped part on the debit card is called the EMV chip. EMV means Europay, MasterCard, and Visa- the three companies that created this technology. It looks like a small metal square, but it contains a microchip that works like a mini computer.

Earlier, the debit card only had a black magnetic strip at the back. This strip used to store your card's data, but it was easy for thieves to copy it. The EMV chip is much safer. It creates a unique code for every payment. This makes it very difficult for thieves to copy the card and use it elsewhere.

How does the chip work?
When you insert the card into the machine (called dipping), the machine 'talks' to the chip in your card. The chip then creates a new secret code for that payment. Even if someone steals that code, it cannot be used again. This is very different from the old magnetic strip, which always gave the same code and was easy to copy.

Some cards now also have contactless payment technology. Now the card has to be tapped on the machine for payment, and it works through NFC (Near Field Communication). But even in tap payment, the chip keeps your data safe.

What happens when the card expires?

When your debit card expires, the chip stops working with banks and shops, because the bank blocks the old card number and issues a new card and a new chip. Physically, the chip remains on the card, but it is of no use because it cannot connect to the bank system.

If you cut the card into small pieces before throwing it away, which also includes the chip, then it is ensured that no one will be able to misuse your old card.

Why was the chip added?
The chip was added mainly for security. It prevents fake cards and reduces online fraud. It was widely adopted after many cases of card cloning were reported in countries like India. It also helps in global acceptance. Many countries now accept only chip cards, as these are more secure than magnetic strip cards. In simple words, the chip makes your money more secure during card payments.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.