A downgrade transaction means that when an IC credit card is swiped, it does not give priority to inserting the card (inserting a chip) or swiping the card, but still uses the magnetic stripe to swipe the card.
Because the POS machine with chip acceptance function still uses the magnetic stripe card swiping method to swipe the IC credit card, it is called downgrading.
Downgrade transactions are accompanied by the emergence of chip-magnetic stripe composite cards, and the upgrading of acceptance equipment requires a process. Composite cards that could have been used for more secure chip transactions, but because POS machines and other acceptance terminals do not support chip cards Due to reasons such as transactions or the chip may be damaged and cannot be read, magnetic strips are allowed to be used to complete financial transactions as the next best option. ?
Extended information:
1. There are three types of bank cards circulating in the market:
1. Pure magnetic stripe cards with only magnetic stripes ( Requires swiping card to pay)
2. Financial IC card with chip only (needs to insert card to pay, or tap to pay)
3. Composite card with both magnetic stripe and chip ( It can be swiped or plugged in, and it can also be touched to pay).
2. Advantages
Using chip technology can effectively prevent this type of situation from happening. The chip of the financial IC card has been upgraded to hardware, and the card information is stored in the smart chip. In addition, the complete key system, offline authentication, online two-way authentication, etc. ensure the anti-counterfeiting of the card and the security of transactions, which can effectively protect card holders. People's bank account funds are safe.
Magnetic stripe chip composite card: Currently, the magnetic stripe chip composite card has the functions of both a magnetic stripe card and a chip card, so its actual security is equivalent to that of a magnetic stripe card, and it does not prevent copying. Didn't work. Only turn off its magnetic stripe transaction function so that it is a true chip card.
Baidu Encyclopedia - Chip and Magnetic Stripe Composite Card
Baidu Encyclopedia - Downgrade Transaction