General Chip FAQ’s

What is a Chip card?
A Chip card, sometimes referred to as a “smart card”, is a credit or debit card containing an embedded computer chip, which gives the card the ability to store and process data. The Chip card provides enhanced security, because it is very difficult to duplicate and greater convenience, because it allows multiple functions to exist on one card (e.g. stored value, loyalty programs, etc.)

What are the benefits of the Chip card to consumers?
Consumers have a lot to gain from the migration to Chip technology. Benefits include:

• Added security:
• Chip cards are very difficult to copy
• Enhanced privacy as Chip cards provide additional protection to avoid disclosure of personal information
• Added convenience:
• Greater speed and convenience at the point of sale
• Chip platform will allow for the addition of non–payment applications, such as reward programs, in the future
• Added durability:
• The Chip is more durable and will last longer, it will take longer for the Chip to wear than the current magnetic stripe design

Why is the industry moving to Chip?
The move to Chip card technology is the latest innovation in the rapidly–changing debit and credit card environment, and demonstrates the industry’s efforts to further secure Canadian electronic payments.

Migration to Chip technology brings with it a number of benefits, both to consumers and merchants. Perhaps the most important benefit that Chip cards bring to the Canadian marketplace is the added security. Chip cards are credit and debit cards with computer chips embedded in them, making them more difficult to copy, thereby reducing counterfeit fraud.

• Cardholders will insert their card into the device or terminal, rather than swipe, and leave their card in the terminal for the duration of the transaction.
• Credit cardholders will need to enter a PIN number, just as they do now for debit cards. PIN is a more secure form of consumer identification and will therefore replace cardholder signature.

Are you doing away with the magnetic stripe?
Magnetic stripes will co–exist with Chip to allow consumers to use their cards in other countries that have not yet migrated to Chip technology. Chip terminals will recognize both Chip and magnetic stripe cards. In non–Chip enabled terminals a signature is required for credit cards and a PIN for debit.

Does the move to Chip mean that the magnetic stripe is not secure?
Cardholders should have full confidence in the security of magnetic stripe cards. The migration to Chip technology represents a forward–looking evolution of electronic payment systems designed to make an already safe payment system even more secure.

During the transition period to Chip, magnetic stripe cards will continue to provide Canadians with a safe, reliable and convenient method of payment. In addition, cardholders can be confident in the protection afforded by the added security features offered by individual payment card companies.

Are Chip cards 100% immune to fraud?
Chip represents the highest level of security available to protect payment information and prevent fraud. While no technology is 100 per cent invulnerable, Chip cards employ a range of security features and measures that work in concert with each other to create a multi–layered defense against fraud. We are regularly testing our systems and the technology to assure the highest level of security.

Will Canadians be able to use Chip cards outside of the country?
Yes. The UK has been using Chip and PIN technology since 1997 and many other countries, including Asia have also successfully adopted Chip technology. For people traveling to these countries, Canadian Chip cards will be fully compatible with these systems. In those countries that have yet to switch to Chip technology or do not plan to, cardholders will be able to use their cards since the Chip cards will still have a magnetic stripe.

When will Chip be fully implemented?
Each financial institution has different policies regarding migration timelines. From an industry level, beginning in 2008 many merchants and cardholders will start to see the introduction of cards that feature Chip technology, and within three years of this date, it is expected that the majority of cardholders and merchants will be able to fully benefit from this new technology.

What is EMV?
EMV is an acronym for “Europay MasterCard Visa” and is the global technology standard for Chip–based payment cards to replace existing magnetic stripe cards. The EMV standards, finalized in 1996 in Europe, were created with the goal of ensuring global interoperability of Chip–based payment cards and their payment terminals/readers. In 2002, MasterCard International merged with Europay International.

What kind of information will be on the Chip card? Will it hold specific details of customer information like date of birth, address, etc.?
There will be no personal information on the Chip. Only the PIN number and the applications to approve or decline a transaction at a Chip terminal will be housed on the Chip.

Why is the USA not going to Chip and PIN technology?
Chip and PIN technology is still being evaluated in the USA.

Kitchener Waterloo Trial FAQ’s

Why did you choose Kitchener–Waterloo for this trial?
The Kitchener Waterloo area was selected for a trial, given its size, demographics, and proximity to the Greater Toronto area where most of the participating institutions are located.

Who will be participating in the trial?
In addition to Interac Association, MasterCard Canada and Visa Canada, there will be representation from financial institutions (banks and credit unions), processors and merchants in KW. The number of Financial Institutions will grow as participants finalize their plans.

What do you mean by ‘trial’?
The trial is an opportunity to test the interoperability of all contact chip systems and devices. Using a defined area focuses these activities by containing the number of cards and devices. This allows us to measure the effectiveness of operational and customer/merchant experiences in a controlled environment thereby ensuring a smooth transition to chip technology for all participants.

In addition to the technology, the trial will also assess communications to customers and merchants, and allow participants to monitor merchant and consumer awareness and adoption.

When will the trial start?
The first chip transactions have already been completed. Card issuance and device deployment will continue to increase over the coming months and is expected to reach a sufficient volume for research by March 2008. (If asked, sufficient volume has been identified when 1 in 5 transactions are chip to chip.)

When will the trial end? How will you measure success?
Cards and devices will remain in KW, given that the trial will form part of each participant’s national chip roll out plans. The trial is expected to last until fall 2008. There will be a point during the trial where processors and financial institutions will have achieved their desired learning and will proceed with their individual roll-outs.

Why will you be moving into the trial so slowly?
Initial introduction of chip cards into the market will be controlled. We want to use the initial results from these early transactions to fine tune the systems before issuing a large number of cards into the national market.

Given the multiple payment brands, financial institutions, and processors involved in this trial, roll–out will vary according to each participant’s schedule.

What type of education will the KW merchants receive and who will be responsible for this?
The acquirers (payment processors) will continue to educate merchants, as they do today, with support from payment card associations.

How will KW cardholders know which terminals are accepting chip cards?
The payment processor will work with its merchants to make them aware of each terminal”s capabilities so that the merchant and employees are aware when a chip transaction is available.

When a card is presented the terminals will also play a role in communications. During the transactions, the cardholders will be directed to follow the prompts and instructions provided by the terminal – just as they do today with debit cards.

At the time of launch, through various marketing and communications initiatives we plan to communicate the locations in the region that will be accepting chip. We may also provide merchants with a symbol/icon that will identify chip ready terminals (TBC).

Have you tested cards using a project team and/or employees first before opening it to KW cardholders?
Some cards and terminals have already been tested in–house and some trial participants may use employees to conduct their first transactions leading into a more general issuance of chip cards to KW residents.

Will all KW cards and terminals be replaced?
No. Each financial institution (in the case of cards) and payment processor or merchant (in the case of terminals) will select what it considers to be an appropriate number for participation in the trial. All cards and all terminals will be functional during the trial whether a chip or non chip card is used.

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