‘Not all stripes to be deactivated’

Banks to exempt some credit card users

SEVERAL banks will not deactivate the magnetic stripes on local credit and debit cards that have been used overseas at least once in the past year.

But it is understood that the new rule to reduce fraud, which consumers have criticised for its inconvenience, will still hit most users here.

Ong-Ang Ai Boon, director of the Association of Banks (ABS), which imposed the new policy requiring users to “activate” the magnetic stripes on their cards for overseas use, yesterday said banks may exempt frequent travellers and those who are residing overseas.

Out of the 10 card-issuing banks here, five, including Maybank, will not deactivate local cards that were used overseas at least once in the past year.

A sixth bank said it would exempt cards that had been used overseas at least once in the past six months.

All the six banks will be sending letters to exempted customers, giving them the option of deactivating their cards.

These exemptions were allowed as banks were concerned about inconveniencing customers who live overseas or travel often, said Ong.

But she reiterated the need for the new rule, adding: “It was a collective decision taken for the good for the financial sector and for consumers.

The Straits Times reported earlier that all 10 card-issuing banks here will deactivate the magnetic stripes on credit and debit cards by Oct 1. The stripes on all newly issued credit cards will also be inactive by default.

Experts say magnetic stripes pose a real security risk, unlike EMV chips that store data in an encrypted form, making them harder to break into. While all credit and debit card payments here are processed using EMV chips, magnetic stripes are commonly used abroad.

“Anyone can buy an electronic reader to extract the information from the stripe, then clone cards for use,” said Samson Yeow, a senior lecturer at Singapore Polytechnic’s school of digital media and infocomm technology.

According to a global survey last year by financial consulting firm Aite Group, 26% of Singapore respondents had experienced some form of card fraud in the past five years.

Singapore resident Ian Farr, 36, who has three credit and debit cards, was a victim.

He received a call from HSBC in December 2011 to verify a S$700 (RM1,780) transaction made on his credit card at a McDonald’s outlet in Johannesburg, South Africa. — The Straits Times / Asia News Network