Credit Card Encryption: What is It and How Does It Work?

In an era of digital transactions, safeguarding financial information has become significantly important. This is where credit card encryption comes into play. Credit card encryption is a defence against fraud and data breaches. Let’s delve into understanding what credit card encryption is and how it is an effective way to secure transactions.

What is Credit Card Encryption?

Credit card encryption transforms sensitive financial data into a complex code while providing additional security against unauthorised access. The security of the credit card at the terminal where it is scanned is primarily involved in credit card encryption. It helps transmit the card’s information between the terminal and the back-end processor.

How Does Credit Card Encryption Work?

While making the purchase, the algorithm scrambles information such as your account number and bank details, requiring an encryption key to unscramble it. However, this information cannot be accessed without this key, allowing the merchant and financial institution to conduct the transaction safely.

Encryption Methods

Credit card encryption has paved the way for different encryption methods, such as:

1. Magnetic Stripe

Magnetic Stripe cards contain user information. The stripe is made of iron particles and stores the embedded data. When someone swipes the card through the terminal slot, the reader decodes the embedded data. After that, the reader rejects or approves the card accordingly. Fraudsters target magnetic stripe cards through skimming. Although magnetic stripe cards have made transactions faster, they have also been superseded by other safer technologies.

2. Tokenisation

On the other hand, credit card tokenisation is a security protocol for sensitive data. It replaces a credit card’s 16-digit number with a unique alternate ‘tokens.’These randomly generated tokens enable effective payment processing. In addition, credit card tokenisation increases the privacy of credit card transactions, thereby lowering the threat of data breaches and fraud.

3. EMV Chip Technology

An EMV chip (Europay, Mastercard, and Visa) is a physical credit card that contains a square microchip. A credit card with an EMV chip inserted at the terminal slot reads the chip. The EMV chip verifies the authenticity of the card, commonly called dipping. In addition, an EMV chip generates a one-time use code for each transaction called a cryptogram. This changes with every transaction, making it harder for fraudsters to steal data.

Advantages of Credit Card Encryption

Credit card encryption adds an extra layer of security. Here are a few benefits of credit card encryption:

1. Additional Layer of Security

To begin with, credit card encryption adds a security measure that provides protection. Furthermore, it allows you to conduct secure transactions online. All merchants and banks should utilise this effective way of fraud protection. Despite these features, safeguard your credit card details like PIN, card number, or CVV. Premium credit cards like One Credit Card take active security measures to encrypt your credit card to reduce fraud.

2. Trust and Confidence

Credit card encryption builds trust between parties involved in authorised transactions and can also improve a credit card issuer or bank’s reputation.

3. Future Payment Technologies

Currently, EMV chips are used for credit card encryption but have also paved the way for other payment technologies, like tokenisation and contactless payments.

4. Compliance

Lastly, the Payment Card Industry Data Security Standard( PCI DSS) adheres to encryption standards to prevent identity theft. To comply with PCI DSS, strong encryption algorithms like the Advanced Encryption Standard (AES) or Triple Data Encryption Standard (3DES) protect sensitive information during storage, transmission, and processing.

ALSO READ: How OneCard Keeps You Safe from Credit Card Fraud?

To conclude, protecting personal information has become a major concern. Therefore, credit card encryption provides peace of mind for securing personal and financial data. The above-mentioned benefits and solutions of credit card encryption can safeguard your financial data from complex threats.