That was the statement of Deputy Governor Nguyen Kim Anh of the State Bank of Vietnam (SBV) at an event on launching the domestic chip cards of several banks on May 28th, 2019 in Hanoi. Under the SBV’s direction, this event was organized by Vietnam Bank Card Association (VBCA) in collaboration with the National Payment Corporation of Vietnam (NAPAS), along with 7 leading banks, namely Vietcombank, Vietinbank, BIDV, Agribank, Sacombank, TPBank, ABBank, in order to officially announce the launching of the banks’ domestic chip cards.
Stable, safe, and smooth conversions will ensure cardholders’ interests, aiming to convert all bank cards from magnetic cards to domestic chip cards by chip technology of safety, security, multi-utility and multi-applications for all Vietnamese people.
A key solution of the banking industry
Converting domestic payment cards from magnetic cards to chip cards is one of the key solutions of the banking industry approved by the Prime Minister in the Scheme for development of non-cash payments in Vietnam in 2016-2020 period (Decision No. 2545/QD-TTg). Following the direction of the Prime Minister, based on the current legal regulations on standards and technical regulations, on October 5th, 2018, the SBV Governor signed Decision No. 1927/QD-NHNN announcing the basic standards for domestic chip cards, which provides detailed regulations on the technical requirements for domestic payment cards in Vietnam using contact and contactless chip technology, in compatibility with the international EMV standards. After that, the SBV Governor also issued Circular No. 41/2018/TT-NHNN dated December 28th, 2018 stipulating the roadmap for converting bank cards to cards compatible with the basic standards for domestic chip cards; accordingly, the conversion roadmap for all card payment organizations is until December 31st, 2020 and for card issuers is December 31st, 2021.
Domestic chip cards must fully meet the technical requirements of safety and security in compliance with the EMV International Standards, limiting risks of frauds in card payment, ensuring payment security for customers. It will be an important platform for the integration and application of the services and non-cash payment facilities for services such as healthcare, education, transportation, insurance and public services. The payment by domestic chip cards with contactless technology for small value transactions will bring new experience to customers when they can make a transaction with just 1 touch to the POS machine. Issuing banks will set a threshold for payment values without customer authentication for small value transactions.
The inevitable trend of countries in the region and around the globe
Currently, Vietnam has 48 domestic card issuing banks with the number of about 76 million cards, more than 261,000 POS machines and 18,600 ATMs, among which most POS machines have complied with the EMV Standards, thus the deployment of domestic chip cards on card accepting devices will not be too complicated. Under the proposed plan, by December 31st, 2019, the commercial banks will have to convert at least 30% of the number of domestic cards, 35% of ATMs and 50% of the existing POS machines to contact and contactless chip technology. All ATMs and POS in the market must guarantee to comply with the VCCS Standards at the latest on December 31st, 2020. No later than December 31st, 2021, all domestic cards being circulated by the card issuers must comply with TCCS for domestic chip cards.
SBV Deputy Governor Nguyen Kim Anh tries the domestic chip card products at the event
Speaking at the event, Deputy Governor Nguyen Kim Anh emphasized that the conversion of domestic chip cards is an inevitable trend of the countries in the region and around the globe in the face of increasing high-tech crime, especially in the markets that have not yet implemented chip technology transformation. Therefore, the VBCA, Napas and the related entities need to coordinate more closely and positively to speed up the process of converting domestic chip cards in accordance with the roadmap issued by the SBV. The conversion must ensure continuous, stable and safe card operations; at the same time, ensuring the legal interests of the cardholders during the conversion process.
Deputy Governor Nguyen Kim Anh stressed that the conversion of domestic payment cards from magnetic cards to chip cards is one of the key solutions to promote non-cash payment of the banking industry and has been approved by the Prime Minister in the Scheme for the development of non-cash payments in Vietnam in 2016-2020 period. Following the direction of the Prime Minister, based on the current legal regulations on standards and technical regulations, on October 5th, 2018, the SBV Governor signed Decision No. 1927/QD-NHNN announcing the basic standards for domestic chip cards, which provides detailed regulations on domestic payment card technical requirements in Vietnam using contact and contactless chip technology, in compatibility with the international EMV standards.
Assessing the implementation of the set-out objectives, Mrs. Nguyen Tu Anh - Chairwoman of Napas’s Board of Directors said: On the side of Napas, we are ready in terms of human resources and technology to support the remaining banks to upgrade their domestic chip card issuance and payment systems. Napas is studying the possibility of cooperation with the international card organizations in order to join with Vietnamese banks to issue co-badge cards between domestic chip cards and international chip cards, allowing cardholders to use their cards conveniently both inside and outside the country. In addition, in order to support the banks in the conversion work, aiming to convert domestic chip cards in accordance with the roadmap of the SBV, Napas has implemented a policy to reduce the switching service fees by up to 80% (depending on the types of transactions) for the banks that have met the technical conditions to convert their magnetic cards to domestic chip cards from May 1st, 2019”.
Customers experience using the domestic chip cards at the event
Discussing at the event, the VBCA and the leaders of the first seven banks deploying the domestic chip card issuance and payment expressed their commitment to continue with efforts to accomplish the conversion of domestic chip cards in accordance with the roadmap set by the SBV. The conversion of magnetic cards to domestic chip cards will not affect customer transactions. However, the cost of conversion is also a concern for banks, especially the banks with a large number of cards, but basically the banks will conduct the conversion for current cardholders free-of-charge, or consider to collect the new card issuance fees in different phases. The banks will also notify their customers of the time of issuing new cards, the processes and procedures for registering for new card issuance, as well as the related policies (if any) in accordance with the law.
This is the first time Vietnam payment market has applied a unified technical standard compatible with the EMV international standards, affirming the proactiveness and timely application of the progressive achievements of Industry 4.0 in payment activities of the banking industry; helping to make payment transactions more secure, creating favorable conditions for the banks to develop new and modern payment features for domestic card products; opening new opportunities for domestic cards to participate in the international integration.
It can be said that there are huge opportunities still opened for the non-cash payment market in Vietnam, especially with the successful conversion of magnetic cards to chip cards. The opportunities for the domestic cards to participate in the international integration once they have met the stringent requirements of safety and security of the international organizations. With the contactless payment infrastructure of domestic chip cards, plus the application of technology to digitize card information on mobile devices, the future of the market will welcome the increasingly popular "touch" payment trend.
VA