Preventive dose against credit card frauds: chip based cards
By Ankit Sharma
Apr 7, 2010
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Banks are taking various steps to curb the problem of credit card frauds. The latest preventive measure adopted by them is in the form of chip based cards.

Chip based cards are different from the normal cards in the way that these cards contain a chip which contains all information in an encrypted format which is undecipherable by fraudsters. The conventional cards contained information in the black stripe which is seen on the backside of the card.

The chip based cards also have additional security level in the form of personal identification number.

Many banks have started issuing chip based cards to high end customers as they are the ones more prone to frauds. Recently SBI came up with chip based Platinum debit card.

During the launch State Bank of India's chief general manager R K Garg said, "The introduction of this technology would provide improved security to customers as the data on the chip is extremely difficult to copy or change. Frauds would be contained and minimize charge backs, which would reduce banks' administrative costs. It would also enable the bank to store multiple applications on a single card, such as loyalty applications and electronic purse."

Axis Bank was the first to launch this kind of card with its Visa Platinum card in March 2008. Banks like Citi bank and Kotak Mahindra are also providing this kind of technology on some cards.

This technology is referred to as EMV which stands for Europay, MasterCard, Visa standard by some card users.

"EMV chip cards are increasingly becoming the standard in many countries, especially in Europe and South East Asia. These cards offer the highest level of security to customers especially against card data compromise at point of sale (POS)," said Parag Rao, executive vice-president, head of credit cards at HDFC Bank.

The bank came up with this technology in its cards around three months back.

"HDFC Bank initially is targeting premium customers by offering chip-based cards and upgrading existing signature based cards to chip cards. We will also focus on customers who frequently travel overseas," he said.

Banks say that the cost of these cards would lessen as volumes rise. With more and more banks opting for this technology, the costs would automatically come down as competitive pricing measure.

"Internationally, starting October 2010, the liability of a fraud will be shifting to the bank that issues the card instead of the merchant or the bank on whose terminal the card has been swiped," a private card issuing bank commented.


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