Why there are microchips in credit cards

Microchips in payment cards improve security by generating unique transaction codes

Magnetic strips store unchanging data that is easily cloned, but microchips act as miniature computers that encrypt sensitive data. They also resist fraud by creating data unique to each transaction, preventing duplication.

Contactless credit cards descend from a batteryless Cold War listening device

The same physics that let Soviet spies eavesdrop on the US ambassador in 1945 underlie contactless payment methods today. The device is a passive chip powered wirelessly by incoming radio waves.

Only 14% of transactions are in cash, as of 2025

Credit (35%) and debit (30%) cards have long eclipsed cash as the primary method of payment in the US. It is a primary backup, however, with 90% of customers intending to use cash to pay or store value and 80% carrying cash.

Listen to a podcast episode from 1440's editor in chief that explains how a credit card transaction works behind the scenes.

When you buy even something as small as a $5 latte, a global relay between banks and networks like Visa and Mastercard is triggered. It all started with a 1958 campaign from Bank of America that jump-started the credit card revolution.

Visa, the first credit card network, still dominates competitors with a roughly 52% market share by purchase volume.

Among the major credit card companies in the US, Mastercard had about 25% of the market share in 2025. American Express had roughly 20%, and Discover had the smallest market share of about 4%.

Algorithms built to detect credit card fraud can deny charges if they perceive the attempted purchase is unfamiliar or unusual based on historical data, even when a person has enough credit to make the purchase.

Since fraudulent charges are rare compared with the much greater number of transactions across purchase histories, these models have been shown to be overly sensitive, lacking sufficient training data on what legitimate fraud looks like. Models also perform less reliably for groups in low-income areas or communities of color, given less available data from which to build an accurate baseline.

Financial institutions check for lots of things before authorizing a purchase

Before authorizing a purchase, card issuers consider whether or not the cardholder has a high enough available credit limit to make the purchase, where the purchase is being made in order to reduce fraud, and more.

How microchips are made

Our increasingly electronic world depends on tiny devices called microchips to function. It takes half a year to create one, which is approximately the size of a fingernail. Engineering them is a highly involved process that starts with silicon-rich sand and eventually turns into billions of transistors packed into one small area. Watch this video to understand the complex feat of creating microchips and how they’re relevant to our daily life.

Old credit cards can be made into guitar picks, phone stands and more

Experts recommend always cutting through the chip and the card number when disposing of expired credit cards, as the magnetic strip, the chip, and the card number all contain information that thieves might be interested in.

The history of credit cards begins with the 'Fresno Drop.'

On a 1958 morning in Fresno, California, about 60,000 people woke up to find a strange rectangular piece of plastic on their doorstep without explanation. Those chosen for the "Fresno Drop" didn't know it yet, but Bank of America was behind the credit card delivery stunt.

Customers wrote just one check a year in 2024, on average

Major retailers like Target have stopped accepting checks in recent years as real-time payment systems are increasingly being implemented across the US. This shift is considered an improvement in safety—as checks are vulnerable to fraud—but can lead to some exclusion for those without access to digital devices.

US consumers collectively owe more than $1T to credit card companies—almost as much as they owe in auto loans.

Why Americans are drowning in credit card debt

Americans owe more than $1T to credit card companies. And with rising interest rates that prevent cardholders from paying down debt (not to mention the rising cost of living), that number is likely to keep growing. A podcast episode explains how the US got here, and what policymakers and individuals can do about it.

Merchants have to pay credit card transaction fees each time a card is swiped

Credit card networks such as Visa, Mastercard, and American Express must calculate fees for not only the customer, but also the merchant in every transaction.

Gas stations top the list of riskiest places to use a debit card

Unlike credit cards, debit cards withdraw funds directly from your checking account, and federal laws provide fewer consumer protections against debit fraud. Gas station "skimmers" and long periods of separation from the card at restaurants are some of the more vulnerable spots for use.

One in five Americans has an error on their credit report, according to the Federal Trade Commission

In 2026, four US senators sent letters to two of the nation's major credit bureaus (TransUnion and Experian) after an investigation revealed that they were fixing fewer errors on consumers' credit reports.

What your credit score actually means

The modern iteration of credit scores hasn’t been around for that long—it was invented just a few decades ago, in 1989. This video outlines how the credit scoring system has evolved and become more complex since then. Plus, it explains what your credit score actually means, what factors impact your score, and more. Watch it here.

American Express debuted its first charge card in 1958 to give travelers access to cash abroad

The original American Express charge card was made of purple paperboard and allowed customers to book travel. Unlike credit cards, the card's balance had to be entirely paid off each month. When the card first launched, 250,000 customers used it, and 17,500 companies had agreed to accept it.

Digital passports allow identity verification to be digitized

By scanning the security chip on the back of passports and capturing images or video of a person, apps like Google Wallet and Apple Wallet create a digital version of the document. Some states have also developed their own apps for digital driver's licenses.

US women got the right to open a credit card in their own name in 1974

Before that year, banks in the US were legally allowed to deny women credit or charge them higher interest if they failed to get a male cosigner.

The process of electronic funds transfer was approved in the US in 1978

An electronic funds transfer is the transfering of money from one bank account to another via computer-based systems. When it was first introduced, it was revolutionary. A video from 1980 aimed to explain the value of electronic funds transfer to consumers at the time.

The Secret Service was originally formed to combat counterfeiting

By the 1860s, an estimated one-third of US currency in circulation was counterfeit. In 1865, the Secret Service was created specifically to combat the country's serious counterfeiting problem, which had led to widespread financial instability. This was partly due to the lack of federal currency standardization in the country at the time.

Microplastics are infiltrating the human body with unclear but concerning effects

Scientists have linked microplastics to immune system damage, hormone disruption, inflammatory diseases, and even cancer—yet most of their health impacts remain unknown due to limited research. Studies suggest we ingest about a credit card's worth of plastic weekly.

Hackers once used 'Fortnite' to clean money from stolen credit cards

Hackers using stolen credit cards would create "Fortnite" accounts and purchase V-bucks, the in-game currency. The hackers would then sell the entire "Fortnite" account on sites like eBay. For instance, an account with $100 worth of stolen V-bucks might sell $25 on eBay.

Voting in the US has shifted from days-long journeys to modern, secure ballots

In the early 1800s, voting was limited and arduous, often requiring long travel and in-person balloting. This illustrated resource traces how voting technology evolved to expand access, speed elections, and improve security over time.

Fintech relies on technology, not physical location, to serve financial customers

Most of the industry's prominent players were created since 2010, and are still in a growth phase. These institutions have broadly disrupted traditional banking and have pushed physical banking locations toward obsolescence.

Some coin denominations have ridges etched on their sides, partly to prevent counterfeiting, in a practice called 'reeding.'

The first steps to rebuilding your credit score include getting to know exactly what's on your credit report and figuring out how far you are from the '700 club,' or 'good score' range.

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

Memecoins are a type of cryptocurrency—a form of digital currency with a wide variety of uses—created around popular 'memes,' or viral internet jokes.

Radioactive elements can introduce software errors because the ionizing radiation they produce can detach electrons from atoms, and computer code relies on the distribution of electrons.

In 2019, a laptop loaded with six of the worst malware in history and described as 'an exhibit of historical weaponry' sold for $1.3M.

The name 'Silicon Valley' arose from the founding of Shockley Semiconductor Laboratory in Fairchild Semiconductor in 1956-57, founded near Stanford University in Palo Alto

The idea for the Federal Reserve was conceived in secret in 1910—with bankers donning duck hunt gear for disguise while traveling to a remote country club on Georgia's Jekyll Island

Tattoos remain visible on your skin thanks to immune cells called macrophages

Discover the catastrophic consequences of a failure of the US electrical grid—something that is more likely than many Americans think.

When you complete a CAPTCHA on a website to prove you are human, you may be unknowingly training algorithms for self-driving cars, whose systems require training data to help identify crosswalks, bicycles, and other outdoor objects.

As of 2025, the most cited papers in science include a review of graphene, methods to improve image recognition, streamlining electron density calculations, and optimizing protein studies.

Indefinite cloning of some endangered species may not sustain their longevity because cloning success rates decrease as genetic mutations accumulate.

The US Constitution is widely regarded as the longest-standing written national constitution still in force—see how it has influenced rights worldwide.

When caught in the mouths of cardinal fish, seed shrimp release glowing, bioluminescent chemicals, which alert predators of the cardinal fish, prompting the shrimp's ejection.

Long before Major League Baseball began allowing instant replay for balls and strikes, an umpire reluctantly used the technology to determine whether a hit was a home run, a move that inadvertently ushered in a new era for the sport.

Telehealth demand for GLP-1s for weight loss is booming as consumers seek easier access.

Some researchers have labeled nomophobia, the fear of being without your phone, as 'the phobia of the 21st century.'

Up to a million Girl Scouts sell about 200 million cookie boxes every spring, generating $800 million, largely because refusing a child is frowned upon

Domino's Pizza's 30-minute delivery guarantee was responsible for the chain's 1980s surge, but it was discontinued after the company was found liable for delivery driver accidents.

The American cockroach is actually from Africa, an apparent hitchhiker aboard ships carrying enslaved people, with evidence suggesting the bug may have arrived in the New World as early as the 1600s.

Clever Hans was a 1900s horse that was believed to be able to solve math equations, tell time, and read and comprehend German, until a psychology student discovered how he got his answers.

According to the physics of black holes, our 4D reality may be a hologram—a projection of information coded on a 2D surface on the edge of the universe.

Brandi Chastain, the star of the 1999 US victory over China in the 1999 Women's World Cup, was a last-second choice to take the penalty kick that sealed the victory.