If you are not understanding magnetic cards and chip cards what? How are they different and how to distinguish and recognize these two types of cards? What type of card is preferred and used by consumers? Follow the article below, all will be explained briefly and easily by Banktop.

What are word cards?

A magnetic card is a card with a black or brown magnetic stripe that has been encoded with customer information and information on the back of the card. Customer’s recorded and saved information is encoded by magnetic stripe bar and cannot be changed or edited. Weak security. Magnetic cards are made of PVC or PET plastic with a magnetic stripe (Hico – Loco) on the back of the card.

you are watching: How to distinguish magnetic card and chip card? Which card should I use?

What are word cards?
What are word cards?

How Magnetic Cards Work

When you insert a magnetic card into an ATM to withdraw money or swipe the card on a POS card machine to pay, the information stored in the black magnetic stripe on the back will be read by the readers in the machine. From there, the features and transaction steps begin to be implemented.

Some advantages as well as disadvantages of magnetic cards?


  • Compact size, convenient, easy to carry.
  • Easy transaction, fast.


  • Low security feature, easy for thieves to steal information as well as forge cards and take money from the card.
  • The quality of the card as well as the magnetic stripe of the card is quite poor, easily scratched, damaged, leading to a situation that causes cardholders to have to redo the card, losing customers’ time and money.

What is a chip card?

Chip cards as well as magnetic cards are ATM chip cards with a chip on the front of the card. In the chip is the cardholder’s information that has been encoded into the chip, but the customer information stored in the chip card can be easily changed.

What is a chip card?
What is a chip card?

Current chip cards include 3 types:

  • Contact chip card: is a card with a gold or silver chip on the front of the card. The chip will store the cardholder’s information and can customize and update the information in the chip. When the cardholder wants to withdraw money at an ATM or swipe a POS card, the cardholder must insert the card with the chip into the card reader, the card will be received and the customer can start using the card’s features and services. Okay.
  • Contactless chip card (contactless): is a chip card with an antenna hidden around the card allowing the chip card to be connected to a card reader within a short range (from 2 cm to 10 cm) instead of the card having to be plugged directly into the card. to the card reader. The card is designed with easy identification when it is shaped like a wave, making it easy for users to recognize and with just a light touch with the card swiping device with integrated features, customers can easily pay a card. fast and convenient way.
  • Dual interface chip card: This is a card that combines the two types of cards mentioned above. That is, the dual-interface chip card can be used both contactless and used in direct contact with the reader in a normal way.

Some advantages and disadvantages of chip cards?


  • Information on the card is highly secure, hard to steal
  • The card has an application integration with services, payment means, etc.
  • Cashless chip cards for areas such as transportation, insurance, healthcare, education, public services, etc.
  • Chip card is an international payment card, so it can be transacted globally


  • Processing is slow due to the high security of the card, requiring multiple confirmation steps.

How to distinguish between magnetic card and chip card

Comparative contentCard from Chip cards
Design styleMagnetic tape in black or brown for encrypted recording and storage is designed on the back of the card.– chip is mounted on the front of the card, compact in gold or silver color

– Back side: There is a magnetic stripe like a magnetic card

card typeThere is 1 type (Hico/Loco)There are 3 types of cards including:

– Contact chip card.

– Contactless chip cards.

– Dual interface chip card.

ReliabilityLow strength, magnetic tape is easy to be scratched.Highly durable, the information on the chip can be changed and repaired many times.
How to identify cardholderIdentification through magnetic stripe, cardholder’s signature on the back of the card.Identification by pin code.
Where to store cardholder informationEncrypted cardholder information is stored on magnetic tapeEncrypted cardholder information is stored on an electronic chip and magnetic stripe on the back of the card
Application integration capabilitiesNot available.– Integrate many applications on one chip such as retail loans, student cards, savings books, etc.

The card comes with a contactless payment feature that makes it easy for cardholders to pay by simply touching the card to the card machine without having to hand the card to the staff or insert the chip into the machine.

Information encryption formText format and encrypted only once, no changeIn the binary form of the computer and constantly changing.
Security level– Cardholder information is saved as text on magnetic tape.

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Information is easily decrypted and stolen.

– It is easy for crooks to install sneaky devices when entering pin codes from users.

=> Low security level.

– Cardholder information is encrypted in the form of a signed sequence in the computer’s binary system.

– The chip’s encryption will be constantly changed, creating a unique and never repeated password each time the customer makes a transaction.

– In case the card is stolen, the fake card will not work because the stolen transaction code will not be reused, the card will be rejected.

=> High level of security.

Fees when using the cardMagnetic tape can only store certain information and cannot be erased to record new information. Therefore, it is very expensive to buy a white card when the customer changes the card.The information on the chip can be erased and rewritten many times, saving the cost of buying a white card.

Should I use a magnetic card or a chip card? Why?

Should I use a magnetic card or a chip card?
Should I use a magnetic card or a chip card?

According to Circular 41/TT-NHNN issued by the State Bank, from December 31, 2021 will officially stop using cards from ATMs. Then cards from ATM will not be accepted at all transaction points nationwide. Therefore, in order to continue using the bank’s services such as withdrawing money, making payments, etc., customers are required to change the card from ATM to chip card before December 31, 2021.

The change according to Circular 41/TT-NHNN, chip cards bring customers many benefits and high security as analyzed above. Therefore, using chip cards will be safer for consumers.

Some notes when using chip cards

Do not place the chip card near sharp objects, store the card in a safe condition, to avoid damage to the chip

  • Do not bend, bend the card will lead to the chip may be damaged affecting the chip circuit
  • Limit withdrawals at ATMs outside the system because the withdrawal fees are very high.
  • When transferring money through an ATM, it is advisable to only transfer funds within the same system to save costs.
  • You can use your chip card for international online purchases.
  • The annual fee is about 30,000 VND higher than that of a magnetic card depending on the bank.

How to change magnetic card to chip card

Instructions to change magnetic card to chip card
Instructions to change magnetic card to chip card


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Currently, banks are encouraging customers to change magnetic cards to chip cards before December 31, 2021 to receive free card exchange service. But with the complicated epidemic time, ensuring health and safety is the top priority and the state does not force consumers to change before December 31, 2021.

Therefore, after the epidemic is under control and the government reopens transaction office services, we can change the magnetic card to the chip card later or we can change it online.


To be able to change magnetic card to chip card, there are 2 basic ways:

Direct exchange

Change magnetic card to chip card directly
Change magnetic card to chip card directly

Prepare ID card/CCCD before going to bank transaction points to convert magnetic card to chip card.

Online exchange

Change magnetic card to chip card online
Change magnetic card to chip card online

Customers can completely convert magnetic cards to chip cards at home without having to go to the bank’s transaction counters to convert.

  • Step 1: Go to the banking application you are using.
  • Step 2: Select card reissue
  • Step 3: Choose a home delivery method
  • Step 4: Confirm the information and wait to receive the card.


The cost of converting magnetic cards to chip cards at most banks is very low or free. So you can prepare a little money for the cost of changing magnetic cards to chip cards (if any).


Above is all information about magnetic cards and chip cards that Banktop has shared with you. Hopefully, the above information will help you easily distinguish these two types of cards and know how to convert magnetic cards to chip cards in the fastest way. Good luck.

Edited article: Banktop.vn

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