Credit cards, ATM cards without chip will stop working after December 31
As per the new directive issued by the Reserve Bank of India (RBI), any credit or debit card with magnetic stripe will not be functional in ATMs across India starting from January 1st 2019. The RBI directive had asked the banks in the country to ensure that they completely migrate to EMV chip and PIN based credit and debit cards by December 31, 2018. According to an RBI circular, all existing bank cards should be Europay Mastercard Visa (EMV) chip- and pin-based from January 1. The magnetic stripe cards will not be valid after December 31.
The remaining magnetic stripe cards are those that were issued prior to September 2015. As part of its measures to beef up security and mitigate risks, the RBI made it mandatory for banks to issue only EMV chip- and pin-based debit and credit cards (domestic and international) from September 1, 2015.
EMV chips are placed close to the top of left edge of a credit or debit card, and look similar to the chip on a SIM card. The EMV chips-based cards will replace the older magstripe cards, which only have a magnetic stripe at the back, as a more secure means of digital transaction. By RBI’s order, the magstripe cards have to be replaced with EMV chip-based cards by the end of this year, irrespective of the former’s validity. The magstripe cards are easier preys to banking frauds like skimming, which the EMV cards can keep at bay.
The EMV chip, named after its creators Europay, MasterCard and Visa, stores payment data on a chip-enabled payment card with support for dynamic authentication. This means, the card generates dynamic data every time it is used for a transaction, making it impossible for fraudsters to copy user data off the credit or debit card.
In contrast, the mag stripe card stores user data on a magnetic stripe capable of static data authentication only, making it easier for fraudsters to copy data from them. While EMV chips also employs static data authentication, it has dynamic data authentication and other barriers to shield user data from unauthorized access.
It is for this additional layer of security that the RBI had asked banks to migrate entirely to EMV chip and PIN based cards. The banks had requested to extend the December 31 deadline for migrating to EMV chip-based credit and debit cards, but the plea was turned down by the central bank.