“The End of an Era: What Happens to Your Money When This ATM Card Type is Phased Out on July 1st?”

The State Bank of Vietnam’s (SBV) Circular 18 on bank card operations mandates a cessation of transactions using magnetic stripe cards across all banks from July 1st onwards. This directive applies to all types of stripe cards, including those with stripes only and hybrid chip-and-stripe cards.

As of July 1st, cards that have not been switched from stripe to chip technology will be unable to perform transactions such as cash withdrawals and deposits at ATMs and CDMs, payments at POS terminals, and interbank transactions. In some cases, stripe cards may be completely blocked.

A common question on many cardholders’ minds is: “What happens to the money in the bank account linked to these cards?”

What happens to your money if your magnetic stripe card is blocked?

The discontinuation of magnetic stripe cards is a necessary step in Vietnam’s banking industry’s card technology migration plan, aimed at ensuring maximum security for users. However, it’s crucial to emphasize that this change only affects the physical means of transaction (the card) and has no impact on your assets (the funds in your account).

Think of your bank card as a key to accessing your house (bank account). When you replace an old, damaged, or insecure key with a new, modern one, all your possessions and valuables inside remain untouched.

Similarly, your bank account securely holds your money at the financial institution. The bank card, whether magnetic stripe or chip-based, is merely a tool provided by the bank to facilitate transactions like cash withdrawals, transfers, and payments at ATMs and POS terminals.

Therefore, when a magnetic stripe card is blocked or becomes invalid, the entire balance in your account remains safely managed and protected by the bank at all times.

Why the phase-out of magnetic stripe cards?

This decision stems from the SBV’s requirement outlined in Circular 41/2018/TT-NHNN. The primary reason is that magnetic stripe technology is outdated and susceptible to security breaches:

• Vulnerable to data theft (Skimming): The black magnetic stripe on the back of the card can easily be copied by high-tech criminal devices.

• High risk of fraud: Criminals can use stolen information to create duplicate cards and withdraw money from your account.

In contrast, chip cards (those with a small metal chip on the front) offer superior security. Each transaction generates a unique, dynamic encryption, making it nearly impossible to replicate or counterfeit chip cards.

What should cardholders do now?

If you still have a magnetic stripe card, take the following proactive steps to ensure uninterrupted transactions and better protect your assets:

Check your card: Look at the front of your card. If there’s a small, square metal chip (similar to the chip on a SIM card), it’s a chip card. If it only has a black magnetic stripe on the back without the metal chip, it’s a stripe card, and you need to replace it.

Contact your bank to switch cards: You can visit the branches or transaction offices of the card-issuing bank. Most banks now offer free and swift chip card replacement services, and some even allow card replacement requests through their mobile banking applications.

Don’t delay: While your money remains safe, a blocked stripe card will prevent you from accessing your funds at ATMs or making payments at stores, causing inconveniences.