Despite high costs domestic banks are issuing more chip cards that meet EMV standards to replace magnetic strip cards in order to improve security and meet the central bank regulations
Counterfeit transactions have fallen sharply with chip cards (Photo: vneconomy.vn)
According to Pham Dang Khoa, deputy director of Vietinbank’s Card Centre, the biggest problem for banks when it comes to replacing magnetic strip cards is the cost. Banks have to pay for the new cards and invest in devices that accept them, such as ATMs and POS machines. Meanwhile, most customers are not willing to pay to switch.
With more than eight million existing customers using magnetic strip cards, Khoa estimated his bank will have to spend a large sum as the cost of producing a chip card is roughly eight to ten times higher than magnetic strip cards.
To encourage customers to use chip cards, Khoa said VietinBank would help customers replace their old cards due to the advantages of the new ones.
According to Khoa, the information contained in the chips was encrypted and only the issuing bank could read the data on it. Thus, they reduce the risk of information being stolen and counterfeits. There have been no issues regarding security with the new cards, which shows how secure they are, Khoa said.
Similarly, Chu Hong Ngoc, director of VPBank’s Operations Division, said VPBank is determined to offer free cards for customers to speed up the replacement.
VPBank has about 1.5 million cards in circulation and more than 500 POS machines, and the bank will pay for the full conversion cost, Ngoc said.
Nguyen Hung, general director of TPBank, said his bank has also considered offering free replacement in the first phase of conversion.
In the next stage, depending on State Bank of Vietnam's (SBV) policies as well as the bank's goals, TPBank will try to create the best conditions for customers, Hung said.
Sharing the same view, Dao Minh Tuan, deputy general director of Vietcombank, said the replacements were free in the first phase.
Vietcombank has some 14 million domestic debit cards in circulation so the conversion cost will be enormous, Tuan said, adding that his bank plans to replace 30 percent of the old cards as well as 30 percent of ATMs and 50 percent of POS machines in 2019.
Despite these cost concerns, Pham Duy Hieu, general director of ABBank, said ABBank has set a goal of replacing all magnetic strip cards with chip cards by mid-2020.
According to banks, many countries in the region such as Indonesia, Thailand and the Philippines have already switched to chip cards.
Statistics show that counterfeit transaction rates decrease sharply with chip cards, they said, adding that chip cards will also help boost cashless payments in Vietnam.
With the active participation of banks, the SBV expects to complete its plan of replacing all 75 million magnetic strip cards in the country with chip cards by the end of 2021.