NEW AND MORE SECURE : CHIP BASED CREDIT CARDS !!

WHY ARE CHIP BASED CREDIT CARDS MORE SECURE THAN  MAGNETIC STRIP CARDS..??

 With recent incident of 30 crore credit card fraud and increasing incidence of card frauds, Indians were scared to use their plastic money so as to resolve it, Reserve Bank of India (RBI), the banking regulator of India had come out with a regulation on Feb 28 th 2013 directing banks to replace all magnetic strip based credit and debit cards used for international transactions with chip based credit and debit cards.

 Everybody can own at least one chip based credit card since the Reserve Bank of India (RBI) has asked banks to replace the existing magnetic stripe credit and debit cards with the more secure chip-based cards by 30 November 2013.

Why are they different?
The most visible difference is the small chip, like a SIM, that is fixed in the front. Different from regular cards with the magnetic strip at the back, chip cards do not have to be swiped at the point-of sale (POS) terminals. Instead, they have to be inserted deep into the device and the cardholder will be required to enter in a unique PIN to complete the transaction, which increases the security level.

Which banks are offering them?
Several leading card issuers, including SBI Cards, Citibank, ICICI Bank, HDFC Bank and Axis Bank, have already switched to chip cards in some categories. From 1 December, banks will have no choice but to compulsorily issue chip cards to all customers who have used their cards abroad at least once.

The good news is that most banks are not charging an additional fee to upgrade to the smarter Chip-based credit card system. There can be exceptions. Since chip cards are more expensive than magnetic strip cards, some banks may charge a nominal fee. It can be more clearly defined after RBI’s final decision.


RBI has also directed that new debit and credit cards can be used in India only, and the customer will be provided an international card only if he demands for it. There will also be a limit specified by the bank and customer for international transactions, which will be based on the risk profile of the customer. The changes are required to be achieved by Indian banks before June 30 th 2013.
Although RBI’s initiative to prevent credit and debit card fraud is appreciable, this movement has caused inconvenience to Indian banks, customers and even a lot of Indian e-commerce companies. The chip based cards are at least five times more costly than the traditional magnetic strip cards. According to an executive of a leading bank in India, it would cost at least Rs.150 to Rs.200 each on replacing magnetic strip cards with chip cards, and it’s very difficult for banks to replace so much quantity of cards in short period of time.
RBI has also kept in mind the needs of the customers, so that they are not inconvenienced in any way and they don’t face any problems. Some banks have upgraded this system, keeping in mind the original deadline of June 30 th 2013.

So if you are one of those costumers who have received the new card and also have the old card, then what should you do? Banks normally grant an overlap period, during which both the old and new cards can be used and after sometime the old card will automatically become inactive. On the other hand, if your bank has not yet given you the new card, you can approach your branch to find out when you will be receiving the new card with the updated chip system. Make sure to update your details if it has changed, so that your card reaches you on time.
According to a bankers view it as a fair pay price for more secure transactions. In view of the increasing importance to safeguard electronic transactions and prevent further problems, it is not expected that RBI will grant a further extension on this matter beyond November 30 th 2013. Fees and charges and the time when u will receive your card are expected to be clearer as the time comes closer to this deadline.

The question which arise is how much responsive it would be with Indian market??