Chip based credit & debit cards as against the more commonly used magnetic strip ones

Reserve Bank of India (RBI) last week suggested the industry shifts to chip-based cards as against the more commonly used magnetic strip ones.

Chip-based cards come with encrypted information, which makes then safer. But, the apex bank wants new credit and debit cards to provide greater security by asking for a second-level authentication by way of a personal identification number (PIN ).

Currently, all transaction data from the PoS terminals or automated teller machines (ATMs) to the host system are sent in a clear text format. The transaction data travels through public-switched telephone networks and General Packet Radio Service (GPRS). Any data compromise, due to wire tapping at the merchant establishment or during the communication carriage can lead to fraud. Fraudsters who get hold of a card can copy the information in case of magnetic stripe cards. However, this is not possible with chip-based ones.

More details available at : chip-based-cards-will-cutriskfraud-when-you-go-shopping