70 million magnetic stripe cards ready to be converted to chip cards hinh anh 1Vietcombank domestic chip card has just been released (Photo: Vietnam+)

Hanoi (VNA) - “By this time, the preparation process, infrastructure, resources, techniques ...is ready to support all commercial banks in the process of converting magnetic cards to chip cards, as required by the State Bank of Vietnam in Circular 41/2018 /TT-NHNN, amending Circular 19 on bank card operations. Vietnamese VCCS card chip set was also developed in accordance with specific standards for Vietnam market and compatible with EMW international standards."

The information was revealed by Nguyen Quang Minh, Deputy General Director of the Vietnam National Payment Corporation (NAPAS) on the roadmap for converting magnetic card (ATM) to chip card.

70 percent of bank cards are ready

Minh said that it is expected that from May 28, some commercial banks will start to issue ATM cards made of high-security chip technology to replace the existing magnetic stripe cards.

In 2019, 21 million ATM cards will be converted into chip cards, accounting for about 30 percent and by the end of 2021, all cards on the market will use new chip card technology.

To date, seven banks have participated in the conversion, including Vietcombank, BIDV, VietinBank, Agribank, TPBank, Sacombank and ABBank. These are banks which have large number of cards, estimating about 70% of the total number of cards across the country.

Leaders of Napas also said that the application of chip card technology standards will limit skimming (stealing information for fake cards), or fraudulent transactions of foreign individuals and organizations with bank accounts and cards.

Besides, the application of chip card standards between credit institutions and payment service providers will bring many benefits to customers from payment speed to information security.

Minh emphasized that “the advantage of contactless chip cards is that transactions are very fast. Small value transactions (estimated at less than 1 million VND) will not need to enter PIN / sign but are still able to process. You can still put it in your wallet, just touch the device to accept the card when making transactions."

A problem that many cardholders are concerned about is the cost of conversion, because in fact, the cost to produce a chip card is quite higher than a magnetic stripe card.

Minh said currently there is no official document of any parties on the regulations related to the conversion fee. However, each bank will have its own policy for this, Minh said, adding he believes that banks will have special policies for this issue.

The Napas leader also said that the cost of making new embryos is very cheap, only accounting for about 2-3 percent of the card issuance cost. Therefore, the cost of converting a magnetic stripe card to a chip card will not be as high as the issuance of a regular new card.

According to Minh, the card conversion process will also be carried out step by step, not massively. In the immediate future, the banks will review cards which are about to expire and new customers and change to new cards without affecting customer transactions.

70 million magnetic stripe cards ready to be converted to chip cards hinh anh 2These cards will soon be changed to chip cards (Photo: Vietnam+)

Necessary conversion

In recent time, many cases of fraud and counterfeiting of magnetic cards have been successfully carried out, causing serious socio-economic damages.

Not only that, banks  also have to face pressure from international card organizations that issuing banks bear the risks of circulating magnetic stripe cards.

An expert in the field of payment said that nowadays the magnetic stripe card technology is quite backward, criminals easily attach devices (skimming) to ATMs to steal data, forge magnetic stripe cards, and withdraw money.

Minh affirmed changing from magnetic to chip cards will help limit information copying and stealing for fake cards to withdraw money from ATMs. According to statistics, fake transactions have decreased sharply since the conversion./.