Big changes are coming to payments this week; here's what you need to know

Chip cards and competition for Apple Pay are arriving

Apple Pay payment
An iPhone 6 being used to make an NFC payment via Apple Pay Credit: Martyn Williams

It's the biggest week in payment technology since Apple Pay was introduced last year, and the changes could have a long-term impact on how you buy goods and services in stores.

A couple of new technologies are launching in the U.S. this week: debit and credit cards with embedded chips, and Android Pay and Samsung Pay.

The chip technology brings the U.S. up to date with what's already standard in much of Europe, Australia and Canada. It is being introduced to combat fake card fraud, which accounts for about two thirds of fraud in stores. To beat it, the chip on the card generates a new, unique ID each time it's used in a payment terminal.

To see if your card has the technology, just look at the front. The chip is instantly recognizable.

Chase EMV United card Martyn Williams

An EMV chip is seen on a credit card

If it's there, many retailers will start asking you to dip the card in a reader rather than swipe it, although that's really the only visible change when you make a payment.

In other countries, the system was introduced with PINs that have to be entered each time the card is used, but for reasons only the payments industry really cares about, the U.S. is sticking with signatures for credit cards.

If the chip isn't on your card, don't worry. Existing "swipe" cards will continue to work, and because adoption of chip-compatible payment terminals is voluntary, it will take several years for the new system to become ubiquitous.

In the case of debit cards, you'll still need to enter a PIN for transactions over a certain value -- typically $25 in most stores, $50 in grocery stores -- but that's the same as now.

The other change underway is the introduction of new mobile payment systems: Android Pay and Samsung Pay.

Android Pay Martyn Williams

The Android Pay logo is seen on a smartphone screen

Both are competitors to Apple Pay and allow consumers to make payments without showing a payment card. The card details are stored in a smartphone ahead of time and in-store payments are made by bringing the phone close to a compatible terminal.

The three rivals are based around the same security system, in which a disposable "token," or number, replaces your card number when making a payment. The idea is that should the number be stolen, it's useless because it can only be used once.

To use any of the three systems, the store will need to support contactless payments. To see if that's the case, there's a handy logo that is used on many terminals in the U.S. and worldwide.

NFC payment terminal Martyn Williams

A payment terminal with an NFC payment logo compatible with Apple Pay and Google Wallet

Support for the smartphone-based systems varies by retailer and by bank, so that too will take some time to roll out so it's available to all consumers.

Apple hasn't said much about consumer use of Apple Pay, so hard numbers on its popularity are unknown. But Apple, Google and Samsung all see the future of payments as being tightly linked to smartphones.

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