SBI online: What is this new chip-based debit card? How is it better than Magstripe cards?

These days State Bank of India (SBI) and other banks are replacing the existing debit cards of their customers without any charges. The messages are being flashed via SMS and are also seen on SBI online. They are doing this to meet the global standards of the online payments system and under the Reserve Bank of India (RBI) guidelines, each and every bank in India will have to do that by end of September 2019. So, the whole exercise is related to the RBI guidelines and the global payments system. Now the question is what are these chip-based debit cards and how are they better than the existing ones.

Chip card security is the latest standard in debit card security. This standard includes a small microchip in the debit card that protects buyers against fraudulent transactions. 

Elaborating upon how new debit cards are better than the existing Magstripe cards and how it would help customers to avoid any kind of online fraud, Pawan Duggal, a New Delhi-based cybercrime expert said, "Chip-based cards are designed in such a way that it prevents online fraud through card cloning, skimming, etc because the cards have sophisticated encryption, which is difficult to hack." 

Duggal explained that magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles on a band of magnetic material on the card. The magnetic stripe, sometimes called swipe card or magstripe, is read by swiping past a magnetic reading head.

"A hacker or malware attack fishes out these stored data from the Magstripe cards we are using these days. But, in the case of new debit cards, it would restore new data after each transaction by the cardholder that would make it difficult for the card cloning cartel," said Duggal.