The simple answer? Because the RBI wants you to do it 🙂
The complex answer? Read on..
EMV stands for Europay, MasterCard and Visa, and is a standard for embedding integrated circuit chips in credit and debit cards, and for operating them internationally.
If you see a chip (like the one shown above) in your credit / debit card, then your card is EMV enabled. Otherwise it is not, and you should talk to your bank and get a replacement asap! Without that, you might not be able to do any international transactions after June 30, 2013 (less than 3 months from today).
Cards with an EMV chip are more secure than those without one, and can help reduce fraud – in card present as well as in card not present transactions. In case of in-store card swipes, you will also have to physically enter your PIN as a step to reduce fraud.
Cards with EMV chips may also have other benefits, such as doubling up as a credit and a debit card, or a MasterCard and a Visa card – all in the same physical card. Though not very common, we might see more such cards in the not-so-distant future.
And that’s the end of the complex answer. If you want a more complex (and a longer) answer, then read about EMV on Wikipedia 🙂
So, are your cards already EMV enabled? If not, then when do you plan to get them replaced?