Eli5: How is a debit chip or tap to pay anymore secure than a mag strip with the same data on it?

Question

Eli5: How is a debit chip or tap to pay anymore secure than a mag strip with the same data on it?

In: 118

Answer 1

Imagine I am talking to you on the phone. I ask you: What is your name? You say “Jon Smith”. Ok, I take money from Jon Smith. If you aren’t Jon Smith, I have no way to prove it. That’s the mag strip.

Instead, I ask you: What’s your name and what’s the last house number you lived at? You say Jon Smith, 3455. I can now confirm you are likely Jon Smith (or at least know something extra “secret” about Jon Smith.) That’s mag stripe + CCV.

But the problem is if someone is eavesdropping on the phone, they can claim to be Jon Smith at 3455.

So, instead of asking for your house number, I might ask you for the *sum* of the last two houses you lived at: 3455+1111 = 4566.

And the next time I ask, I might ask for the difference between your two house numbers: 3455-1111 = 2344. Even if you know the sum of the two house numbers you don’t know their difference. That’s chip with cryptography.

Of course the cryptography is much more complex than adding or subtracting two numbers but it gives you idea of how to communicate that you know some secret information without giving away the secret information.