RBI recently issued a directive which states that all debit and credit cards that do not contain the EMV chip cannot be used for any transaction from 31st December. All the banks in the country must use the EMV chip credit cards and debit cards for doing any transaction.
The Official statement of RBI read as follows:
‘Keeping in mind the objective to further enhance the security and risk mitigation in present-day transactions. It also has a lot of impact on achieving the timeline for complete migration of all existing magstripe cards. “ The Reserve Bank decided not to grant any extension beyond 31 December 2018. All the users are advised to issue their respective cards before the respective deadline. The plea to extend the deadline from 31st December was turned down. This is because bringing down the credit card and debit card fraud crime rate is urgent and necessary.
EMV chips are near to top left edge of the credit or debit card. The EMV chips on the debit or credit card are similar to the chip that is on a sim card. This initiative has been taken by Reserve Bank of India so that all card frauds can be eliminated as EMV chip is one of the secure methods for performing any transaction.
The cards that are being used now that is the cards with a magstripe at the back are prone to a number of frauds and Skimming is one of them. Skimming is a criminal method in which using the fake card slots, the credit or debit card information is extracted.
The Mastercard and the Visa Card are named after its creators Europay and the payment data is stored on the chip-enabled card that contains the EMV chip. It also supports dynamic authentication. With the help of such cards, dynamic data will be generated for each and every transaction.
Hence making it impossible for the criminals to copy the user data of the debit card and the credit cards which is very easy to retrieve from the magstripes. The static data is stored on the magstripe card that is very easy to exploit. However, dynamic data on EMV chip cards are easier to protect from unauthorized access.