Banks required to issue chip cards for security
Vietnamese commercial banks are required to issue chip ATM cards to improve customers’ transaction security from March 31, according to the State Bank of Vietnam’s Circular No. 22/2020/TT-NHNN.
|Vietnamese commercial banks are required to issue chip ATM cards to improve customers’ transaction security. (Photo: g-pay.vn)|
This is part of the country’s roadmap to replace all magnetic strip cards with chip cards by the end of this year. The chip cards are compatible with Europay, MasterCard and Visa (EMV) standards as well as those of international card organisations like JCB and UnionPay.
International card-issuing organisations had asked Vietnamese banks to switch to chip cards that meet EMV standards to increase safety amidst a growing number of information thefts. Security experts have also warned Vietnam’s delayed transition to chip technology could put the country at risk of becoming a haven for card criminals from around the world as it is among the dwindling number of countries where magnetic swipe cards are still prevalent.
According to banks, issuing a chip card can cost some 1.50-2.50 USD, meaning they will have to spend between 105 million USD and 175 million USD for the transition, in addition to the cost of upgrading ATMs and core banking systems to adapt to the change.
Besides ensuring greater payment security, the replacement is also among the central bank’s plans to promote non-cash payment methods. Under the Government’s strategy, by the end of 2025, at least 80 percent of adults in Vietnam are hoped to have bank accounts and the number of non-cash transactions will expand by 20-25 percent annually.
However, banks said the switch faces significant barriers when their customers are hesitant to move to chip cards as they have to fill in a lot of documents from the banks.
To deal with the issue, foreign and domestic banks in Vietnam have implemented the e-Know-Your-Customer (eKYC) solutions to provide customers with seamless onboard experience and reduce paper-based procedures.
According to the State Bank of Vietnam’s Payment Department, Vietnam had 94 million domestic cards in circulation by the end of 2020, most of which were ATM cards.
As of the end of the third quarter, Vietnam has around 93.78 million bank cards in circulation, in which the majority are magnetic cards.
Vietnamese banks will only be allowed to issue chip cards from March 31, 2021, according to a State Bank of Vietnam (SBV) draft circular.