South Korea has officially cut off the use of magnetic-stripe payment cards for getting cash at ATMs, according to English-language newspaper, The Korea Herald.
However, in reality there will still be at least one ATM at every banking center that can handle mag-stripe cards until the end of May. After that final-warning transition period, only EMV chip cards will work for ATM cash withdrawals. As of last month, 99.1 percent of those transactions were done with EMV cards anyway, according to Korea’s Financial Supervisory Service.
“The purpose is to fundamentally prevent crimes using forged credit cards to take cash loans,” said Park Sang-choon, cooperative finance and loan business supervision director at the FSS.
That has become the standard approach used by cyberthieves to convert stolen payment card numbers into cash. The problem has become especially acute in the U.S. and other countries where ATMs still accept mag-stripe cards. In cases involving well-organized international cybertheft groups, the groups often recruit street gangs in cities such as Los Angeles to make many cash withdrawals from ATMs using forged payment cards over a single weekend, before the stolen card numbers have been flagged.
Most Korean credit card users already have been issued EMV chip cards, although some are still using the the mag stripes that are still on the back of most cards. The ATM EMV edict won’t affect the ability for merchants to accept mag-stripe card transactions, the FSS said.
But the financial authority concluded, after testing since last September, that it was time to switch off the ability to accept easily copied mag-stripe cards in favor of an EMV-chip-only rule for cash withdrawals.
Korea is not alone in making that shift, though it has moved faster than some other areas. For example, the European Central Bank issued a call in 2011 for all cards in the Single Euro Payments Area to eliminate mag-stripe use. But almost four years later, the ECB hasn’t issued an official EMV-only ATM policy, according to Finextra.