Integrated Circuit

What is an Integrated Circuit (IC)?

An integrated chip is a small chip, usually manufactured using silicon that serves as a payment card. An IC utilizes a microchip that stores data, including a conventional magnetic stripe. An integrated chip is widely used in credit cards such as Europay-Visa-Mastercard (EVM) or chip and pin bank cards.

Besides having the capability to compute and calculate, integrated chips work as microprocessors, oscillators, and amplifiers. ICs also store valuable data and are produced extensively because they are ubiquitous.

Integrated chips have a low cost of production, which is an advantage because they are assembled in bulk, continue to have real-world applications, and are used in various electronic devices.

How an IC Works

A benefit of an integrated chip card is that it stores information on the card itself, and the details can be retrieved when a consumer inserts it into a card reader when performing a transaction. In addition, an IC is protected by a layer of security like a password or PIN code, and the data is transmitted securely.

EMVCo regulates the proprietary technology. ICs are also known as "smart cards" because they have an integrated circuit chip. The application of the technology began in Europe and Asia before it reached North America. ICs have become widespread and become the standard bearer as far as secure payment systems are concerned. It isn't easy to find financial bodies that do not utilize integrated chips in their bank cards.

The implementation of ICs is not limited to debit and credit cards; they are also deployed in other outlets like identification cards that employees must scan when entering their employer's premises.

How ICs tackle theft

The example mentioned above of an individual trying to access a secure building is relevant because it will allow us to elaborate on how integrated chips combat theft. Unfortunately, magnetic strips are prone to duplication, which leads to identity theft. Once an identity is stolen, thieves can create multiple copies, and the information may be used for all kinds of nefarious purposes.

Integrated chips are imperative since the embedded chip in a payment card lowers the risk of theft, fraud, and associated illegal activities. For instance, if a consumer is using a bank card, they must insert the card into the reader, which means that the magnetic stripe is only used as an alternative in case the chip reader is not functional.

Scammers struggle to replicate the information stored in an IC; in most cases, they cannot access the data to perform transactions illegally. Recently, integrated chip cards have also incorporated a contactless payment method: consumers can make payments by simply hovering their card over the reader instead of inserting it.