The Great Magnetic Shift: Why Banks Are Phasing Out Magnetic Strip Cards

Some banks, such as ACB and Eximbank, have recently and unexpectedly announced the discontinuation of magnetic stripe cards (also known as ATM cards), catching many cardholders off-guard.

Specifically, the Asia Commercial Joint Stock Bank’s Payment Development Center (ACB) stated that their magnetic stripe cards (both international and domestic ATM cards) were officially discontinued as of September 4th.

Cardholders who wish to continue using their cards must bring their identity cards/CCCDs to the nearest ACB branch or transaction office to initiate the cancellation of their magnetic stripe cards and receive a free chip card.

According to ACB, the discontinuation of magnetic stripe cards is in line with the State Bank’s regulations regarding the transition from magnetic stripe technology to contactless chip card technology. Additionally, there have been instances of fraud associated with magnetic stripe cards, and discontinuing their use will enhance the security of card transactions for customers.

Similarly, the Vietnam Export Import Commercial Joint Stock Bank (Eximbank) has announced that their V-TOP payment cards, which use magnetic stripes, will no longer be valid as of September 10th. Cardholders can visit the issuing branch or transaction office to receive a new V-TOP payment card with a chip.

The transition from magnetic stripe cards to chip cards complies with the State Bank’s new security standards.

A leader of another joint-stock commercial bank in Ho Chi Minh City shared that while they did not announce the discontinuation of magnetic stripe card transactions, they have stopped issuing new magnetic stripe cards for several years. Even transactions made through POS machines prioritize reading chip cards over magnetic stripe cards.

Since March 2021, in accordance with the State Bank’s regulations, commercial banks have been prohibited from issuing new domestic debit cards (ATM cards) with magnetic stripes and are required to transition to chip cards. Card issuers must adhere to the domestic chip card standards.

The shift to chip cards enhances security by encrypting customers’ payment information. According to BIDV, chip cards alleviate concerns about card hacking and information theft, making transactions faster, more convenient, and safer.

However, many individuals have continued to use magnetic stripe cards for transactions and withdrawals due to their reluctance to switch to chip cards. As a result, some banks have taken a firmer approach by officially discontinuing magnetic stripe card transactions in the face of increasingly sophisticated financial cybercrimes.

During this transition from magnetic stripe cards to chip cards, banks assure customers that they will not request any card information or personal documents through SMS, Zalo, or email for card cancellation, replacement, or other card-related procedures. Therefore, cardholders must refrain from providing personal information to anyone.