The first few weeks of 2018 have been rough for the Philippine banking industry. The Bangko Sentral ng Pilipinas (BSP) and many of the country’s biggest banks issued warnings for banking customers to be vigilant against fraud and unauthorized access to their accounts.
For example, BDO Unibank, the country’s largest bank by assets, reported that it saw an “extraordinary rise in fraud attacks towards the entire industry” in the last quarter of 2017. In a Facebook post dated January 9, the bank urged its clients to take various precautions to secure their accounts and prevent being victimized by these fraudulent schemes.
Beyond issuing advisories, however, the BSP has also released regulations requiring banks and other financial institutions that issue ATM, credit, debit and cash cards to use technology that makes these cards more secure.
Since 2013, the BSP has been encouraging banks to use EMV technology in their cards. EMV, which stands for Europay, Mastercard and Visa, is “a global standard for credit, debit and prepaid payment cards based on chip card technology.” It said that “chip cards are a more secure alternative to traditional magnetic stripe payment cards.”
If your debit, credit or cash cards have a metallic chip embedded in front, that means that they are already EMV-compliant. When an EMV card is used for transactions, this chip is “dipped” into a terminal and generates a unique code used only for that transaction. Previously, card transactions used the magnetic stripe at the back of the card by swiping it through a terminal, which carried static data that can be easily skimmed and used for fraudulent transactions.
“In this day and age where cyber-attacks and identity theft are boldly being tried by many elements, [EMV] technology helps ensure customer information is not easily compromised as in the past where static customer info can be skimmed from magstripes (magnetic stripes) in cards,” Margarita “Geegee” Lopez, first senior vice president and group head of operations and digital banking at Rizal Commercial Banking Corp. (RCBC), explained to Entrepreneur Philippines via email. “This new technology makes it more difficult for anyone to steal the account information. With the use of EMV cards, our customers can be more confident that every transaction is secure.”
The BSP had originally set a deadline of January 1, 2017 for banks and non-banking financial institutions (NBFIs) to migrate their technology to EMV standards. However, it soon extended that to June 30, 2018 as only a few institutions had complied with the original deadline.
According to Lopez, many banks required more time to make their systems EMV-compliant, which entails changing all of their card terminals, automated teller machines and internal systems. But she also pointed out that one of the main barriers to this shift are the banking clients themselves.
“Convincing the clients to go to the branch to get their EMV card, even if free, is a challenge,” said Lopez. “Despite all communications being done by the bank to convince their depositors to replace their cards to a more secure card, it would still be dependent if the cardholder is willing or has time to go to the branch and have their card replaced.”
Lopez urged all customers to go to their respective banks to have all of their magnetic stripe cards replaced with EMV-enabled ones, as most banks have announced that they will be fully EMV-compliant by the first quarter of 2018. She added that some banks have already made their old magnetic stripe cards unusable in favor of their new EMV-chip cards.
Indeed, the 10 banks listed in the financials index of the Philippine Stock Exchange have announced that they are allowing their clients to go to any of their branches and replace their old cards with new EMV-compliant cards free of charge. Only the Bank of the Philippine Islands (BPI) has announced that they will replace their clients’ cards at a pre-set date—those who wish to replace their old cards before the scheduled date will need to pay a fee of Php150. The other nine banks have requested their clients to have their cards replaced as soon as possible.
As well, some of these banks have announced dates where they will no longer allow the use of their old magnetic stripe cards. Both Philippine National Bank and Asia United Bank will deactivate magnetic stripe cards on January 31, while UnionBank of the Philippines will do so by March 31. Some banks such as EastWest Bank and Metrobank had already announced the deactivation of old magnetic stripe cards at earlier dates, but clients can still have them replaced in their respective branches.
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH