Counterfeit transactions have fallen sharply with chip cards. Photo vneconomy.vn

HÀ NỘI 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’s regulations.

According to Phạm Đăng Khoa, deputy director of Vietinbank’s Card Centre, the biggest problem for banks when it came to replacing magnetic strip cards was 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 would 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 had been no issues regarding security with the new cards, which showed how secure they were, Khoa said.

Similarly, Chu Hồng Ngọc, director of VPBank’s Operations Division, said VPBank was determined to offer free cards for customers to speed up the replacement.

VPBank had about 1.5 million cards in circulation and more than 500 POS machines, and the bank would pay for the full conversion cost, Ngọc said.

Nguyễn Hưng, general director of TPBank, said his bank had also considered offering free replacement in the first phase of conversion.

In the next stage, depending on State Bank of Việt Nam's (SBV) policies as well as the bank's goals, TPBank would try to create the best conditions for customers, Hưng said.

Sharing the same view, Đào Minh Tuấn, deputy general director of Vietcombank, said the replacements were free in the first phase.

Vietcombank had some 14 million domestic debit cards in circulation so the conversion cost would be enormous, Tuấn said, adding that his bank planned to replace 30 per cent of the old cards as well as 30 per cent of ATMs and 50 per cent of POS machines in 2019.

Despite these cost concerns, Phạm Duy Hiếu, general director of ABBank, said ABBank had 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 had already switched to chip cards.

Statistics showed that counterfeit transaction rates decreased sharply with chip cards, they said.

Besides, chip cards would help boost cashless payments in Viet Nam, they said.

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. VNS