Making card transactions more secure

When we swipe our card at shopping malls and restaurants or use it at the ATM to withdraw cash and pay utility bills, we are under the constant threat of our cards being counterfeited. Besides, if you lose your card, someone can misuse the time lag, between your losing and blocking the card, to swipe and imitate your signature at the point of sale (POS).

Chip cards reduce risk

Both these risks can be reduced to a great extent if you use cards that are ‘chip' based rather than ‘magnetic stripe' based and cards that require a PIN to be entered at POS terminals.

Unlike magnetic stripe cards, chip cards (also called EMV cards) use superior technology that helps guard against skimming and cloning. PIN requirement at POS terminals brings in a second layer of authentication, making misuse of stolen cards difficult.

Private banks such as ICICI, HDFC, Axis and Citi have begun issuing chip-based credit/debit/pre-paid cards. But considering the high costs involved in making such cards as also in re-carding all existing customers, they have restricted their offerings to premium customers, whose transaction sizes are large and hence in the high-risk category.

The readiness of the infrastructure too has been an issue. For example, even as the concept of debit cards was just catching on, Citibank and State Bank of India did issue debit cards with PIN requirements. But the limited availability of PIN pads alongside POS terminals made it less popular.

Again, since magnetic stripe cards are only ‘swiped', not all POS machines are equipped to handle chip cards that need to be ‘dipped'.

RBI to the rescue

But the good news is that all this is set to change, thanks to the Reserve Bank. Based on the report of a working group on ‘Securing Card Present Transactions' (i.e. transactions at POS/ATMs), the regulator has recommended that all card issuers (banks) must be ready to issue EMV chip cards by June 30, 2013.

The apex bank has also said that the POS infrastructure must be equipped to support chip cards and PIN-based authentication by the same date.

What you can do

This mandate implies that more banks would come out with chip-based cards and they would look at including more customers, rather than offering it to a select category.

State Bank of India, for example, since mid–2011, offers EMV chip credit cards to almost all its new customers.

If you are an existing SBI Cards customer, check with the bank. You could be entitled to a chip card on renewal.

Besides, the RBI has also said that by June 30, 2013, banks must issue EMV chip and PIN-based credit/debit cards to customers who have made at least one purchase using their debit/credit card in a foreign location.

Three, if you are a customer of a bank that currently issues chip cards, visit your branch. If you have a credit card with dated credit limits or a higher average balance which entitles you to a debit card with enhanced features, you may be eligible for an upgrade to a chip card.

Going by the guidelines, the infrastructure is expected to catch up quickly too. In fact the working group report (May 2011) mentions that about 90 per cent of the POS terminals are already chip-ready.

Says Dhruv Shah, Product Manager, Electracard Services, “While EMV-supporting ATMs are not yet available in India, switches, which drive the transaction processing at ATMs, are already geared to support EMV transactions.”

Moreover, as EMV adoption rates vary worldwide, none of the issuers give you cards that are only chip-based.

All chip cards contain the magnetic stripe at the back. So, while an EMV-compliant machine will use the chip, a non-EMV machine can still process your transaction using the magnetic stripe.

That way, at least some of your transactions will be more secure.

Plastic money has made life much easier for all of us. But unless we have had a personal experience, we don't realize how much of a security nightmare it can be. Here are a few things that will make our card transactions more secure.

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