Your credit and debit card transactions are set to get safer as banks have started rolling out cards with chips, which are safer than the existing cards that store data on magnetic strips.
The Reserve Bank of India (RBI), the banking regulator, has advised all banks to shift to cards with chips and debit or ATM cards.
“We have already started delivering chip-based cards to some of our customers,” said a senior official of private bank. “Gradually, we will deliver chip-based cards to all our customers.”
Major banks such as ICICI Bank, HDFC Bank, Axis Bank and some other private sector lenders have started offering cards with chips to customers. Public sector banks are also planning to roll out such cards soon.
The pressure on banks is mounting to make credit/debit card transactions safer after a gradual increase in the cases of card transaction frauds. Banks are betting on cards with chips because of additional security features.
In cards with magnetic strips, the account information of a card holder is stored in the magnetic strip while the account information in chip-based cards is stored in a chip that too in the encrypted format.
“Storing information in an encrypted format makes a card transaction secure because it is impossible to copy and read the encrypted information,” said a retail banking head of a public sector bank.
Another safety feature is a Personal Identification Number (PIN) number which is given to the card holder. Whenever a card with a chip is used to make a transaction, the user needs to key in the PIN number on the PoS (point of sale) machine.
India is increasing using plastic money. Credit card spending by Indians rose by 28% to Rs. 96,000 crore in 2011-12 from Rs. 75,000 crore in the previous fiscal year, the highest in four years.
Matching the trend, spending through debit cards (or ATM cards) also grew by 38% to Rs53,000 crore in the last fiscal, according to the RBI data.