Five Advantages of Chip-Based ATM Cards

Currently, Indonesian banks encourage their customers to replace their magnetic stripe-based ATM cards with chip-based ATM cards. This step is a follow-up to the letter issued by Bank Indonesia regarding the replacement of ATM cards. If customers aren’t replacing their ATM cards, they cannot make transactions because the banking system will automatically block the use of magnetic-stripe-based ATM cards starting from December 21, 2021.

This blocking is under the BI Letter Number 17/52/DKSP concerning the Implementation of the National Standard for Chip Technology and Use of Personal Identification Numbers on ATM Cards and/or Debit Cards issued in Indonesia. The chip-based ATM card itself is already used widely by banking systems in various countries and has become a global standard.

One of the goals of replacing ATM cards with chip-based ones is to increase card security. Bank Indonesia has also set NSICCS as the national standard for chip technology on ATM/Debit cards which refer to EMV and the global platform in the preparation. NSICCS stands for National Standard for Indonesian Chip Card Specification.  

So, what are the advantages of this chip-based ATM/Debit cards? Check the following explanation.

1. Safer Transactions

Better card security is one of the advantages offered by chip-based ATM cards. The chip technology embedded in it can store a Personal Identification Number (PIN) and can only be processed if the customer enters the PIN correctly at the ATM or EDC machine.

2. Difficult to Duplicate

Chip-based ATM cards are also difficult to duplicate because the data stored on the chip can only be verified for authenticity by offline and online CAM (Card Authentication Method) methods which are more secure. Meanwhile, data on magnetic stripe-based ATM cards are easier to duplicate because it stored on magnetic tapes that do not have PIN protection.

3. Has a Larger Data Storage Capacity

Chip-based ATM cards also have a larger data storage capacity when compared to magnetic stripe-based ATM cards. It is because the chip embedded in it has CPU, memory, operating system, applications, and cryptographic functions that can also affect the transaction speed.

4. Can Transact with a bigger nominal

Chip-based ATM card owners can make transactions with a bigger nominal compared to magnetic stripe-based ATM card owners. Bank Indonesia has raised the limit for cash withdrawals via ATMs for chip-based card holders, from a maximum of IDR 10 million per day to IDR 15 million per day. Meanwhile, interbank transfers rose to IDR 50 million per day from a maximum of IDR 25 million per day. The limit is adjusted to the type of card and the policy from the bank that issued the card.

5. Stronger Physical Card

The physical chip-based ATM card also has better strength when compared to the physical magnetic stripe-based ATM card. It needs stronger protection because they need to protect the chip technology, which has CPU and memory embedded in the card.


Stay Alert When Doing Transactions

The purpose of replacing chip-based ATM cards is to increase security when transacting. However, the way someone commits a crime to enrich themselves will also continue to develop along with technology development.

For example, a recent fraud mode that asks the customer to replace the card through a telephone connection or via chat on behalf of a particular bank. Therefore, it is necessary to be a sharp customer and be aware of crimes that could occur.  

The steps can start from getting used to changing PINs regularly, getting used to transacting in crowded places, and consistently checking mutations regularly, so we can immediately find out if there are suspicious transactions.