Canadians will soon have a new option to help protect themselves against fraud when making purchases electronically — debit and credit cards embedded with a microchip.

Interac is testing the new cards in Kitchener-Waterloo, Ont., in October, then in other markets in Canada next year.

Kirkland Morris, assistant vice-president with Interac Association, says the microchips, appearing as a small gold patch, will make it very difficult to copy the card's information for fraudulent uses.

He told CBC Newsworld on Saturday that instead of swiping the cards, consumers will load them into a store's Interac terminal and leave them there for the duration of the transaction.

The terminal and the cards will "talk to each other," while new security checks are carried out, Morris said.

Debit card fraud is a problem that has grown over past few years, even though the vast majority of purchases go through without incident, he said.

"In 2006, financial institutions reimbursed Canadians about $95 million for fraudulent transactions, so that's a problem that we really do take very seriously," Morris said.

The association predicts transactions by magnetic stripe on the back of credit and debit cards will be phased out within Canada by 2015.

"The magnetic stripe will stay on your card for the time being so you can continue to shop and use bank machines that haven't been converted to the new technology," Morris told Newsworld.

Thieves have used electronic skimming devices to copy debit and credit card data. They then capture the cardholder's PIN, typically with a hidden camera, and create duplicate cards to drain that person's bank account.