Costa Rica’s Central Bank has mandated all banks across the country to incorporate a chip into their debit and credit cards with the client’s personal and security information.
The move is aimed at improving security and preventing card fraud by encrypting data, which is currently only stored in the cards’ magnetic band, The Tico Times reported.
Incorporating chips into cards is expected to mitigate card-cloning, which enables fraudsters to copy a card-owner’s bank account and personal data into another card for use.
The magnetic band found on cards has till now proven to be vulnerable to this type of card cloning with the help of devices called ATM skimmers.
The central bank has also ordered chips to include contactless payment technology that will help businesses charge a customer without swiping the card through a machine.
All banks have been mandated to implement the change from 1 January 2016, though no deadline has been set yet for completing the change.
At the same time, banks will also start issuing cards with chips in exchange for the ones that expire in 2015, are lost or are confiscated.
The Costa Rican Banking Association expects the process to be completed in about four years, with each bank to decide on whether to charge customers for the replacement.