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RBI proposes PIN for credit cards
Published on 4 Jun. 2011 12:07 AM IST
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Credit cards which moved from being embossed pieces of plastic to magnetic swipe cards a decade back are set for another transformation as the Reserve Bank of India moves to the next level of card security.
An RBI panel has said that all credit cards issued three years from now should have electronic chip and transactions should be authenticated by a personal identification number (PIN), stated TOI.
These recommendations have been made in a report by a working group set up by RBI to increase the security of transactions where credit cards are present (unlike online transactions). The report suggests that an alternative to PIN could be a biometric verification of the cardholder’s identity using data from Aadhar - the project by the Unique Identification Authority of India. The move is expected to bring down the level of credit card frauds. But it would increase costs for banks and could also increase the time taken in some retail transactions because of the additional level of security in the form of a PIN. Some card issuers and banks have been proactive on this front. SBI, ICICI Bank, Citibank and HDFC Bank for instance has started replacing plain magnetic swipe high-end cards with dual cards having both the chip and the magnetic swipe.
According to the report, one of the weaknesses of the magnetic swipe card is that it is susceptible to cloning. Such ‘cloning’ of cards is more of a problem for cardholders who travel internationally.
Secondly, all new and renewal card customers should be issued chip cards with PIN by the beginning of the third year. Besides, 70% of all cards should move to chip card and PIN by end of year four. The panel proposes that by the fifth year every credit card in India should be chip-based and the cardholder should possess a PIN.

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