Magnetic-stripe card ban postponed again to 2014

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Magnetic-stripe card ban postponed again to 2014

Financial regulators’ attempt to phase out magnetic-stripe cards in favor of a more secure type of plastic has been pushed back by eight months as there are still an outstanding 26 million of the increasingly old-fashioned debt and credit cards in circulation.

The Financial Services Commission (FSS) and Financial Supervisory Service announced yesterday that the cards will not be accepted at some ATMs from next February, and will be banned from use at all such machines one year later “if everything goes according to plan.”

This represents a dramatic delay as the FSS initially intended to begin phasing the cards out this March, then pushed the deadline back to June when complaints mounted from customers who had not yet switched over to integrated circuit (IC) cards.

However, consumers still held a total of 6.59 million magnetic-stripe debit cards and 19.56 million of the same-format credit cards as of April, the FSS revealed. This equals 9.6 percent and 18.3 percent of all the debit and credit cards used over the last six months, respectively.

Regulators said they have not abandoned the phase-out plan completely as IC cards, recognizable by the gold turtle-shell chip on the front of the card, are more secure than magnetic-stripe cards that are easily duplicated and are often used in illegal withdrawals or money transfers.

The FSS said some 27,940 cases of duplicated cards were reported over the last five years, with consumers suffering an accumulated loss of 30 billion won ($25.74 million).

“If only to establish the security and reliability of electronic financial transactions, switching to IC cards is necessary,” said FSS Deputy Governor Joo Jae-seong.

The magnetic-stripe card initiative has left financial regulators red in the face and comes in the wake of bad press stemming from socially controversial developments such as the protracted savings bank crisis.

Taking flak for having pursued a policy without being properly prepared, the FSS recently demoted the director-general in charge of the phase-out initiative to the position of researcher. “The switch to IC cards will be carried out in stages to minimize consumers’ inconvenience,” the FSS said in a statement.

By Lee Jung-yoon[]

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