The Reserve Bank Of India (RBI) has mandated all banks in India to replace the magnetic stripe-only debit and credit cards with Europay, Mastercard, Visa (EMV) chip cards by December 31, 2018, thereby making the older debit and credit cards useless after the given date. A number of banks across the country have already started sending messages with the same information to its customers.
Reportedly, the directive is applicable to all domestic as well as international cardholders and the cards need to be replaced even if their validity date ends after December 31 of the present year. Earlier the RBI had made it mandatory for banks to issue EVM chip cards for all new account holders after 31 January 2016.
According to RBI, as per June 2018, there are 39.4 million active credit cards and 944 million debit cards in the country and replacement of the ones with the older strips will be free with banks bearing the costs of the new cards.
Why do the magnetic stripe-only debit and credit cards need to be replaced?
Security and safety concerns of cardholders have been a bone of contention. Reportedly, EMV chip-based debit and credit cards are more secure than the older magnetic stripe-only cards. The chip-based cards also known as PIN (Personal Identification Number) cards have more sophisticated data encryption and have better storage technology.
Globally, higher risks of card cloning have led to a shift from the stripe-only cards to the chip and PIN ones. While magnetic stripe cards store sensitive customer information in a static manner, customer-related information is stored in a dynamic manner in the chips which makes cloning difficult. At the Point Of Sale (POS) the EMV chip cards will ask for a PIN as well, which will add an extra layer of security for the customers.
While these changes will reduce the risk of physical cloning of credit and debit cards, the problem of fraudulent activities when it comes to online transactions is still very common even today.