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

From July 1st onwards, all ATM cards utilizing magnetic stripe technology will be decommissioned and rendered unusable across all banks in Vietnam, as per Circular 18 issued by the State Bank of Vietnam. This includes any card that uses magnetic stripe technology, be it solely or in combination with a chip.

Cardholders with magnetic stripe cards will no longer be able to perform transactions such as cash withdrawals and deposits at ATMs and CDMs, make payments at POS terminals, or conduct interbank transactions. In some cases, these cards may be completely locked.

A common concern among cardholders is the fate of the funds associated with these cards. Rest assured, your money is safe and will remain in your bank account.

The discontinuation of magnetic stripe cards is a necessary step in Vietnam’s banking industry’s technological evolution, aimed at enhancing security for cardholders. Importantly, this change only affects the physical card, which is the means to access your funds, and not your actual assets or the money in your account.

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

Similarly, your bank account is where your money is securely stored. The ATM card, whether magnetic stripe or chip-based, is merely a tool provided by the bank to facilitate transactions such as withdrawals, transfers, and payments at ATMs and POS terminals.

Therefore, even if your magnetic stripe card is locked or deactivated, your entire account balance remains safely managed and protected by the bank.

Why are Magnetic Stripe Cards Being Phased Out?

This decision is in line with the State Bank’s requirements outlined in Circular 41/2018/TT-NHNN. The primary reason is that magnetic stripe technology is outdated and poses significant security risks:

• <>Data breaches and theft (Skimming): The black magnetic stripe on the back of the card can easily be copied by criminals using advanced technology.
  

• High risk of fraud: Stolen magnetic stripe data can be used to create counterfeit cards, enabling thieves to withdraw money from your account.

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

What Should Cardholders Do Now?

If you currently hold a magnetic stripe card, take the following proactive steps to ensure uninterrupted transactions and enhance the security of your funds:

Check your card: Look at the front of your card. If there is a small, square metal chip (similar to the chip on a SIM card), it is a chip card. If there is only a black magnetic stripe on the back and no metal chip, it is a magnetic stripe card, and you need to replace it.

Contact your bank to replace the card: You can visit the branches or transaction offices of the card-issuing bank. Most banks now offer free and quick replacement of magnetic stripe cards with chip cards. Some banks even allow card replacement requests through their mobile banking applications.

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