The Hindu Business Line : Afraid of fraud? Go for chip-based card

The latest to introduce this card in India is the UTI Bank. The bank plans to launch the chip - based card by February. "We are in the development stage and certification stage with VISA," said Mr Sameer Nemavarkar, Vice- President, Retail Banking, UTI Bank.

According to the Visa's Web site, at the end of 2005, more than four million chip-based Visa cards were in use across Russia, Egypt, Serbia and others. Chip cards are virtually impossible to counterfeit and powerful encryption prevents unauthorised access to information stored on the microchip, making electronic payments safe.

"The card prevents frauds because the chip cannot be duplicated. However, these cards will be substantially more expensive than regular cards in terms of annual fee," he said. These cards require terminals, which are chip-enabled, mostly installed by banks, adding to the cost. "However, these days most of the terminals are chip-enabled," said Mr Nemavarkar.

UTI Bank had launched its credit cards about two months ago and has targeted one million customers by December 2008.

Countries such as Malaysia, Korea, and the UK have moved towards chip-based credit cards.

In India, ICICI Bank had introduced chip-based credit cards three years ago. However, due to high cost and poor response from customers, the bank withdrew them from the market.

According to a senior bank official, though the introduction of chip-based cards reduces frauds, it cannot create any major impact unless the industry as a whole introduces it. At this point of time, fraud in the credit card industry is extremely low and, therefore, cost of introducing chip cards is not justifiable.

ABN Amro introduced the chip-based smart gold card in 2002. According to Mr Sumant Kathpalia, Head of Consumer Banking business in India, ABN Amro, chip-based credit card has been extremely successful. "It has met our business expectations in terms of volume and value," he said. The annual fee of the ABN-Amro Smart Gold Card, which is a chip card, is Rs 2,000, while the fee for a normal card ranges anywhere between Rs 299 and Rs 1,200.

Another advantage of the chip card is that it allows customers to check their reward points and even redeem the points, while using the card (on a real-time basis) unlike the regular cards.

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ABN-Amro launches 2 credit cards

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Afraid of fraud? Go for chip-based card