Bangladesh Bank has taken initiative to phase out the use of magnetic strip in the credit and debit cards of scheduled banks to secure clients’ card-based transactions through ATMs and POS terminals from data skimmers under its National Chip Specification programme.
A BB official told New Age on Thursday that some banks had already introduced chip-based credit and debit cards after a major ATM scam in the country in February last year, but the banks also kept magnetic strip in the cards.
He said the central bank would develop an app for all local banks to attach it to the chip of their credit and debit cards under the programme.
The BB has already formed a working committee comprising representatives of different banks to implement the National Chip Specification programme, he said.
The working committee held its first meeting at the central bank headquarters in the capital Dhaka on February 14.
Automated teller machines and point of sale terminals in the country can now read card information both from chip and magnetic strip, the BB official said.
Once the BB programme is implemented fully, the ATMs and POS machines will be able to read the information only from the chip.
Banks are now using separate apps for their cards, but then they will have to use a unique app.
The majority of banks have been using the EMVCo’s (Europay, MasterCard, and Visa) technological standard with their cards’ chip for long in line with their respective agreements with Visa, MasterCard or American Express.
Under the agreements, the foreign payment system operators (PSOs) enjoy commission from the banks for per transaction by clients, the BB official said.
He said that the banks would have to use only the central bank’s app once it was developed.
The BB, however, will develop the app with EMVCo’s cooperation.
EMV is a technical standard for smart payment cards for POS terminals and ATMs across the globe.
The official said the BB would require at least two years for implementing the National Chip Specification programme.
Banks will have to change their all debit and credit cards to attach the app to the chip of their cards in line with the central bank directives.
The BB will prepare terms of condition within one or two months to appoint a consultant company to implement the National Chip Specification programme, the official said.
He said that a number of clients of three leading private banks in the country had become victims of an ATM scam in February, 2016 as the skimmers withdrew money from their accounts by forging their debit card and credit data.
The skimmers set data scanning devices on the ATM booths of three banks – Eastern Bank Ltd, United Commercial Bank Ltd and The City Bank Ltd – to steal money from the clients by cloning the card data of ATM users.
The BB official said that the data scanning devices were mainly able to read clients’ information from the magnetic strip.
The probability of skimming will become almost zero when banks will produce only chip-enabled cards, he said.
He, however, said banks might keep magnetic strip in their cards, but the strip would not function at the ATMs and PoS terminals in the country.
According to the BB data, banks issued 97,05,601 debit cards and 9,25,025 credit cards and 1,72,201 prepaid cards as of November 30, 2016 while they set up 8,909 ATM booths and 33,406 POS terminals.
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