Banks scramble over RBI's EMV cards-only regime

Magnetic stripe cards to linger for years

Even as banks gear up to start issuing EMV (Europay, MasterCard, and Visa) chip and pin-based cards from September 1, they say it will take a few years for all ATM machines to become compatible with the new cards.

Jairam Sridharan, head (retail lending and payments), Axis Bank, said, “There are about 350 million magnetic stripe cards currently in circulation in the country. For all of them to be replaced with chip and pin will likely take a few years at the minimum.”

The Reserve Bank of India (RBI) on May 7 notified all banks to issue only EMV chip and pin-based debit and credit cards for domestic and international use from September, as a security and risk mitigation measure for card-present and electronic payment transactions. It also said the migration plan for existing magnetic stripe-only cards will be framed in consultation with stakeholders and a timeline for the same would be advised.

While some banks, such as Axis Bank, have completely moved to EMV chip and pin-based cards, others such as Yes Bank and State Bank of India currently issue the cards for international usage as per the mandate by the RBI issued on February 28, 2013. It had also notified that all point-of-sale (PoS) terminals in India were to be compliant with EMV guidelines by December 2013.

Sridharan said most of the PoS terminals of Axis Bank are compliant with the EMV guidelines and it would be ready in time with the cards as well, as it has been issuing EMV Chip cards since Q2 of 2013. He added that different banks might be at varying degrees of readiness.

Chitra Pandeya, group president and country head, (liabilities management), cards and direct banking, Yes Bank, said, “Yes Bank had moved to issuing chip-based cards to those customers who desired to carry out international transactions as per RBI guidelines. However, for customers who were looking at only domestic transactions, magnetic stripe cards were being issued with zero international limits.”

Pandeya said, “In line with the revised guidelines, Yes Bank is enabling its systems to issue all debit and credit cards as chip-based cards prior to the timelines mentioned.” She added that while PoS machines have migrated to accept chip cards, most of the ATM machines in the country still read magnetic stripe data.

ATM shift to take time

She said it may take substantial time for all ATMs in the country to migrate to reading chip data, Pandeya added.

Speaking on the advantages of chip-based cards, Sridharan said, “An EMV chip-based card is significantly safer than a magnetic stripe card, as it has an embedded chip that is capable of storing data in an encrypted format.”