Clients may use magnetic stripe cards until banks are EMV compliant – BSP

While the central bank has set a January 1, 2017 deadline for financial institutions to meet the EMV chip technology requirements, clients may continue to use their magnetic stripe cards while banks process their migration to the EMV system.

Philippine banks are almost fully migrated their facilities to accept transactions using the Europay, MasterCard and Visa (EMV) chip card technology, but less than half the credit, debit and prepaid cards in circulation are compliant with the system, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

“We’re about 90 percent. Most of the activities are about 90 percent already ... Cards, less than half pa ‘yan. ‘Yun na lang ang kailangang habulin,” BSP Deputy Governor Espenilla Jr. told reporters in a briefing.

“For bank customers, they shouldn’t feel very panicked about the January 1 deadline,” he said.

Starting January 1, should customers fall prey to fraudsters, the banks will shoulder the full responsibility.

“The burden of losses will be borne by the bank that has not yet adopted the chip card technology,” Espenilla said.

'To deal with fraud'

The central bank will coordinate with Philippine banks on the timetable specifying when all lenders should be fully migrated to the EMV system.

“We will engage each and every one of our banks, so we will agree with a full-compliance timetable that is acceptable to the BSP,” Espenilla said.

Espenilla noted most banks have upgraded their software, automated teller machines (ATMs), and point-of-sale (POS) terminals to process EMV chip technology transactions.

The BSP issued Circular No. 808, dated August 22, 2013, requiring all BSP-Supervised Financial institutions (BSFIs) to shift from the magnetic strip technology to EMV chip-compliant cards, including POS terminals and ATMs.

“The main reason we got the industry to move in this direction is primarily to deal with the large number of card frauds that are being observed in the country,” Espenilla said.

The Philippines saw “a few hundred million” pesos lost to fraud in 2015 with the majority due to credit card and ATM skimming, he said, noting that less than half of the 76 million debit and prepaid cards in the Philippines still us the magnetic stripe card.

“Unlike a magnetic stripe card, every time an EMV card is used for payment, the chip on the card generates a unique transaction code that cannot be used again. This feature, known as dynamic authentication, makes it difficult, if not virtually impossible, and costly for fraudsters to counterfeit EMV cards,” the BSP said in a separate brief. — VS, GMA News