During a payment transaction, the chip performs cryptographic processing by assigning a unique code to each transaction. This helps prevent the transaction data from being fraudulently reused. Chip processing takes place only when the card is used at a chip-activated terminal.

A chip terminal is a point-of-sale (POS) device or ATM that is able to process chip transactions. Instead of swiping your card, you insert it in a chip terminal and leave it in the terminal until the transaction is complete. If a merchant does not have a chip terminal or if their chip terminal is not yet activated, transactions will be processed by swiping the card’s magnetic stripe just as they are processed today.

Make sure you remove your card from the terminal before leaving the merchant’s premises! This is a common challenge people face when getting used to using a chip card.