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Indian banks not yet ready to issue EMV standard cards

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Sharath Kumar
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BANGALORE, INDIA: The implementation of EMV (Europay, MasterCard and Visa) standard by Indian banks doesn't seem to be a reality anytime soon! The delay is happening despite the RBI directive to banks to implement the technology by June 30, 2013.

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Credit/debit card skimming is one of the major concerns of the financial industry's and often results in forms of identity theft, credit card fraud or bank fraud. The magnetic stripe credit and debit cards store a user's financial data in static format. This data is vulnerable to be copied during offline transactions by skimming devices, which can be used to create a clone card and make unauthorized offline transactions.

Following a surge in credit card frauds in the country on the account of cards being lost/stolen, data being compromised and cards skimmed/counterfeited, the Reserve Bank of India issued a directive to Indian banks to move to the EMV standard by June 30 of this year.

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However, replacing debit/credit cards of all bank customers within the deadline seems to be unrealistic for now!

ALSO READ: 'EVM cards are more secure than magnetic strip cards'

The RBI guidelines doesn't say that all the customers debit/credit cards need to be replaced with the EMV standard cards, says B R Bhat, CIO, Corporation Bank. He adds that Corporation Bank will start issuing EMV cards only to customers who have done international transaction in past one to two years.

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"We have issued 10 million debit/credit cards and all these can't be replaced at one go," Bhat says. "The cost of issuing a EMV card is five times higher than Master/Visa Card, which has to be borne by the banks." He adds that transferring money to a foreign country from India, doing e-commerce translation, does not constitute an international transaction. An international transaction is one if a debit/credit card has been used in a foreign market.

In order to benefit from EMV, and avoid skimming and fraud, the debit/credit cards need to be upgraded to an EMV chip card from the regular magnetic strip cards. At present, a majority of banks in India have already started issuing EMV chip cards to their customers, says Hon Kuan Lee, regional director of Gemalto, a digital security company that helps banks in migrating to the EMV standard.

The success of the migration exercise is exemplified by the case of Malaysia, which fully converted to EMV chip ATM cards by end-2005. Card fraud was reduced by 85 per cent from $5.9 million in 2003 to $0.3m in that year alone.

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Lee adds that the RBI has been working toward putting in place a system to make both credit card and debit card transactions safer. With its latest directive for banks and financial institutions to migrate to the EMV technology by June 30, 2013, RBI is pushing banks to implement safety measures and eliminate cases of fraud, thereby ensuring secure transactions.

 

The migration from magnetic strip cards to EMV requires an investment in upgrading the banking infrastructure, ATM, point-of-sales terminals and associated processes.

Apart from issuing EMV enabled cards, banks will also have to consider deployment of EMV compliant terminals (ATM centers), and upgrade network and host systems to process chip transactions.

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