DEFINITION of 'Integrated Circuit Card'

An integrated circuit card is a type of payment or identification card that has an embedded circuit, such as a computer chip. Integrated circuit cards are made of plastic or a similar material and are most often associated with specific credit cards known as EMV cards.

BREAKING DOWN 'Integrated Circuit Card'

Integrated circuit cards allow the storage of information on the card itself. For example, a consumer's information on this type of payment card is accessed when the card is used in a card scanner. Combined with other security measures such as a PIN or password, the chip allows the secure transmission of personal and financial information.

Europay MasterCard Visa (EMV) cards are known as “smart cards” due to their integrated circuit chip (ICC). Though they were initially used in Europe and Asia, their use has spread with increasing frequency in 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.

While integrated circuit cards are often associated with credit and debit cards, they are also used in a variety of other settings. For example, employees may be assigned an identification card that they must scan in order to be allowed inside a secure building.

How Integrated Circuit Cards Are Used to Combat Identity Theft

Integrated circuit cards are seeing more use at retail locations as more chip readers are introduced to accommodate this form of payment security. Such cards typically include a magnetic stripe as well to allow transactions to be completed if a chip reader is not available at a retailer’s store. Integrated circuit cards are designed to offer increased security over magnetic stripe payment cards, which can have their information skimmed by fraudsters and then used to access a consumer’s accounts.

Magnetic stripe cards have been frequently duplicated, allowing identity thieves to create copies of the original card, as well as sell the account information they have illegally accessed. The use of the embedded chip in an integrated circuit card can reduce such fraud as it makes skimming a less effective means of accessing account information. Transactions with an integrated circuit card require the chip to be inserted into the chip reader, where available, thus making the magnetic stripe a backup feature to be used only when a chip reader is not available. Since fraudsters cannot access the information secured by integrated circuit card as easily as a magnetic stripe, they're not able to authenticate their illicit transactions.

RELATED TERMS
  1. Warning Bulletin

    The warning bulletin is a weekly list of credit cards that have ...
  2. Cash Card

    A cash card is any electronic payment card that stores cash for ...
  3. Credit Card Encryption

    Credit card encryption is a security measure that is used to ...
  4. Bank Card

    A bank card, also known as a physical card, is used to gain access ...
  5. Dual Interface Chip Card

    A dual interface chip card is a credit or debit card with an ...
  6. Stored-Value Card

    A stored value card is a type of electronic bank debit card.
Related Articles
  1. Insights

    What Is The New Credit Card Chip Good For?

    Under current U.S. credit card requirements, credit card issuers are required to issue chip cards as of October 1, 2015. Instead of swiping your card as you do now, you will slide the card into ...
  2. Insights

    The Evolution Of Credit Card Security

    With the increase in credit and debit card fraud, these measures have been taken to ensure your financial security.
  3. Personal Finance

    10 Considerations For Using Your Credit Card Abroad

    Credit cards can be the best item you pack when traveling, just make sure that you are taking the right card that suits your needs.
  4. Personal Finance

    What happens when your credit card expires?

    Find out why it's a good idea to change and update your credit card once in a while. Learn about other cards that may better suit your needs.
  5. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are five times you shouldn't pay with a credit card — and five times you should.
  6. Personal Finance

    How Credit Cards Affect Your Credit Rating

    The average American household has four cards, but does that mean more is better?
  7. Small Business

    How to Use Small Business Credit Cards

    A small business credit card can be a convenient way to increase your company's purchasing power, but must be carefully managed.
  8. IPF - Banking

    How To Find The Right Prepaid Debit Card

    Prepaid debit cards are becoming increasingly popular. Here are some tips for choosing the right prepaid debit card.
RELATED FAQS
  1. Does Walmart take international credit cards?

    Learn how to use your international credit cards at Walmart stores and on Walmart's site, and find out how to ensure your ... Read Answer >>
  2. What are some examples of common credit card reward program benefits?

    Learn about different benefits available to credit card holders including cash back, air travel miles, introductory rates, ... Read Answer >>
Trading Center