What Do Banks Have to Say About the Sudden Halt of Magnetic Stripe Card Transactions?

Several banks have recently explained their decision to discontinue transactions for magnetic stripe cards (stripe cards). Eximbank cited various reasons for this move, including security concerns, efficiency, and the shift towards newer technological trends. Magnetic stripe cards store cardholder information on a magnetic stripe, making them vulnerable to copying and skimming attacks. As a result, they are no longer considered secure against financial fraud.

Sacombank shared a similar sentiment, stating that stripe cards store customers’ personal information in plain text on the magnetic stripe. This information can be easily stolen through skimming devices attached to ATMs or POS machines. Fraudsters can then create duplicate cards with the stolen information to withdraw money from customers’ accounts.

“Recognizing this risk, Sacombank discontinued issuing stripe cards in 2017, except for a limited number of prepaid cards. We also encouraged customers to switch to chip cards,” said a Sacombank representative. “In parallel, we started phasing out dormant or infrequently used stripe cards in 2019 when the State Bank of Vietnam issued the national chip card standards and the transition roadmap.”

ACB, another major bank, has been encouraging its customers to switch to chip cards since 2019 through SMS, email, and website notifications. By discontinuing stripe card transactions, ACB aims to ensure secure and safe transactions for its customers in an era of increasing technology-related crimes.

Following the official announcement of discontinuing stripe card transactions, ACB advised customers to visit their branches or transaction offices to obtain a free chip card to avoid any transaction disruptions. Customers can continue to use the ACB ONE digital banking application as usual.

Previously, the State Bank of Vietnam had mandated that all banks replace stripe cards with chip cards by 2021. Accordingly, from December 31, 2021, all payment cards issued by banks were required to use domestic chip cards to enhance the security and safety of the national payment system.

According to Sacombank, the number of stripe cards still in use at the bank is negligible, mostly consisting of a small number of prepaid cards (cards loaded with money for use or gift cards), which will be phased out by 2024. Due to the early discontinuation of stripe cards, Sacombank’s current card portfolio mainly comprises contactless chip cards with high security; all customer data is encrypted during the payment process, making it impossible to copy or steal.

Eximbank representatives revealed that approximately 650,000 stripe cards have not yet been converted to chip cards. To minimize customer risk, Eximbank has proactively blocked stripe cards that have not been switched to chip cards and has notified its employees to directly contact customers regarding the matter.

To prevent any transaction disruptions, Eximbank recommends that cardholders check whether their current card is a stripe card or a chip card. Stripe cards have a black magnetic stripe on the back, while chip cards have an electronic chip embedded on the front.

“If you still have a stripe card, please contact your bank to request a switch to a chip card,” advised the Eximbank representative. “Many banks have planned to inform customers about this process, and card replacement can be done at their transaction points. While some banks may offer free card replacement initially, others may charge a small fee. Eximbank is currently providing free chip card replacement for the first replacement per card.”

Chip cards utilize encryption technology for each transaction, making data nearly impossible to copy or forge. This effectively prevents common fraud methods such as data copying (skimming). In the event of card loss or theft, illegal transactions become more challenging as chip cards require a PIN or other security measures during payment.