Integrated Circuit Card (ICC)/Chip

An Integrated Circuit Card (ICC), commonly referred to as a "chip card," is a type of payment card that includes an embedded microchip along with the traditional magnetic stripe. These chips are based on EMV (Europay, MasterCard, and Visa) standards, which are designed to enhance the security and global interoperability of payment cards.

The microchip embedded in an ICC is a small computer (microprocessor) that securely stores the cardholder’s data, including the account number, cardholder's name, the card's expiration date, and the security details necessary to authenticate transactions. Unlike the magnetic stripe technology, which merely stores data statically and can be easily cloned, the chip creates a unique transaction code for each purchase, making it extremely difficult to fraudulently replicate the card’s details or reuse transaction data.

When used at a point-of-sale terminal, the chip card must be inserted into a card reader rather than swiped. This process, often referred to as "dipping," allows the chip to communicate with the reader through a process known as dynamic authentication. The chip and the terminal work together to ensure the card’s validity, significantly reducing the possibility of counterfeit or fraudulent transactions.

Additionally, many chip cards also support contactless payments via near-field communication (NFC) technology. In this case, cardholders can complete transactions by simply tapping their card near a contactless-enabled terminal.

The adoption of ICC/chip technology worldwide is part of an ongoing effort to protect consumer data and reduce the incidence of fraud in card-present transactions. It provides a more secure alternative to magnetic stripe cards, aligning with global trends in payment security.