This is where the story of the magnetic stripe
and the chip on your credit card begins —
an airport in the 1960s.
Back then, you want to pay with a credit card,
you walk up to a ticket counter,
hand over your credit card,
and the airline calls up the bank to make sure it all checks out.
It's all done manually.
But as the lines grew, the time it took to get on the plane grew, too.
So, the airlines went to IBM, International Business Machines,
big deal back then,
and they said,
"This is the problem, can you make us a card that works faster?"
So, IBM tried a few different ways to make a card
and a machine that could talk to each other.
And finally, they said,
"Yes, here, take this piece of magnetic audio tape
and stick it on the card like this."
And the tape had all of the important information you'd normally have in that phone conversation.
A credit card machine could read that tape, send it over the phone lines,
and the bank would get the information almost instantly.
So instead of sounding like this,
"Hello, I'm going to check on Mr. Johnson's credit right now."
It sounded like this,
[beep boop warble warble]
But not in France.
France ended up with tons of credit card fraud
because the phone lines there, well...
they kind of sucked.
"I can't hear much of anything."
So sometimes those swipes just wouldn't go through to the bank.
And the way French stores dealt with it was to stockpile their credit card transactions
and then make one big call at the end of the day.
If you were a French criminal, this was a bonanza.
You could get up in the morning, make a fake card,
show up at the store,
buy something,
and by the time they call to check your credit, you're halfway to your mansion in Marseille.
But, unfortunately for all those nefarious fraudsters, there was a colorful man named
Roland Moreno who knew just how to solve this.
He was a hippie, a freelance journalist, a comedian —
"So, what is the deal with credit cards?"
— and an inventor.
And he had all these engineer friends who'd tell him,
"You know, France has a ridiculous, inordinate amount of credit card fraud.
Why don't you do something about that?"
So our hippie inventor came up with a solution.
He knew all about computers, so he said,
"Why not put a computer chip in the card?
The chip could generate a unique code every time you use it.
In fact, we don't even need to use cards.
We could put the chip in this giant ring."
But the ring didn't really catch on.
The chip was a good idea though because it meant that the machine could confirm that
you were using a real card offline, and as fraud got worse and worse, it started to become
harder for the banks to ignore the chip.
Finally, French companies adopted it with a PIN code system instead of a signature so
it was even more secure, and it worked.
It was so successful that the chip began to spread all across Europe.
Credit cards were finally super secure.
But in the U.S., we were still using the magnetic stripe.
American phone lines worked better, the stripe was fast, and so it was fine —
until so many other countries were using the chip and PIN
that fraudsters turned their focus to the U.S.
We finally adopted the chip, and that's where we are today.
Waiting just a little bit longer in line than we'd like, sort of like the 1960s.