Financial Technology,riskregulation,retail,technology,

Financial Technology,riskregulation,retail,technology,

The Bangko Sentral ng Pilipinas (BSP) has ordered banks to issue all customers with EMV chip-enabled cards until the end of this month or face penalty.

In a statement, the BSP said the Monetary Board, its highest policy-setting body, recently issued supplemental guidelines on EMV migration that it noted finally prescribed a hard deadline for compliance and also laid down penalties for non-compliance.

The new guidelines would “push the banking industry towards full adoption of EMV technology at a much faster pace,” the BSP said.

To recall, the BSP earlier set the deadline for EMV migration on Jan. 1, 2017, but some banks still have yet to comply until now. Cards with EMV chips were deemed more secure than the traditional magnetic stripe payment cards.

“BSP-supervised financial institutions are given until June 30 to fully comply with the EMV requirement. Failure to do so will subject BSP-supervised financial institutions to monetary sanctions provided under relevant provisions in the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions,” the BSP said.

While banks and other financial institutions work to achieve full compliance, the BSP said they were “mandated to book provisions for probable fraud losses starting Sept. 30, 2017 until full compliance is achieved.”

BSP Deputy Governor Nestor A. Espenilla Jr. told reporters last week that fraud loss provisioning was added to cover operational risk.
“If implementation was delayed, they have to estimate possible losses due to fraud because of not being EMV-compliant,” Espenilla explained. The BSP also urged banks to ramp up information dissemination on the process of replacing the magnetic stripe cards with EMV cards.

“To raise awareness as well as manage customers’ expectations on the replacement of their payment cards, BSP-supervised financial institutions should intensify their public awareness programs leveraging on all available communication channels. The information should clearly indicate the date when EMV cards are available and ready for pick-up by their clients as well as the related procedures for replacing magnetic stripe cards and distributing EMV-compliant cards. BSP-supervised financial institutions are further expected to develop strategies to entice or force clients to replace their old cards with EMV cards (in effect, deactivation of existing cards by certain date, offering of rewards/freebies, and/or liability shift for skimming incidents),” the BSP said.

“To further strengthen consumer protection and complaints handling and resolution as prescribed under BSP Circular No. 936 dated Dec. 28, 2016, the actual restitution of cardholder/s with valid claims should take place within the 10-day resolution timeline for complaints and/or requests for chargeback as a result of counterfeit fraud,” the BSP added.

Re-disseminated by The Asian Banker from the Philippine Daily Inquirer