BANKING TECHNOLOGY | Contributed Content, Singapore
Cyril Villemin

Migrating to chip-based ATM cards


The unauthorized ATM withdrawals that occurred in Singapore over the past year have highlighted the issue of payment fraud.

In response to this, the Association of Banks in Singapore (ABS) announced that upgrading from magnetic stripe technology to chip-based technology for ATM and debit cards will have to be completed by the year 2014, a move aimed at protecting consumers from further skimming incidents.

Unlike magnetic stripe cards where the customer’s card information and details is static and easily copied with a skimming device, the data stored in chip-based cards is encrypted, making the card difficult to clone. In addition, the chip contains an embedded microprocessor which generates a unique code for each transaction, thereby increasing the security level.

Switching to chip-based cards also allows banks to take advantage of the EMV standard adopted by all the major payment brands, such as MasterCard, Visa, American Express, JCB, and Discover/ Diners Club.

The migration from magnetic stripe to chip-based cards in Singapore will involve various stakeholders in the payment ecosystem:
Banks will need to upgrade the software and hardware for their ATMs, with the changes or upgrades depending on the final chip specifications or standards adopted. They will also need to issue new cards to their customers. Lastly, banks will need to select a card vendor who can issue cards with the specified security standards, be it static data authentication (SDA) or dynamic data authentication (DDA)
Merchants will have to upgrade their POS to support the new chip card
Consumers will need change their existing cards to the new chip-based cards

We believe the migration will be a very convenient and simple process for consumers as all they need to do is replace their old cards. Singapore’s migration to chip-based credit cards is an example of how smooth the transition from magnetic stripe to chip-based ATM cards will be.

With over 6.5 million NETS cardholders making some 500,000 transactions daily#, migration to chip-based cards will offer consumers peace of mind, knowing that their ATM and NETS payment transactions are better protected against fraud. On the other hand, banks will experience a reduction in fraud and more importantly, can improve their brand reputation and equity, leading to a higher level of trust with consumers. Additionally, EMV cards offer opportunities to market added-value services and innovative products, such as multi-functionality cards enabling payment and transport, or even a virtual card in a mobile device via mobile Near Field Communication (NFC).

These benefits clearly explain why chip-based technology is fast becoming the global standard for ATM card security, with chip-based cards now being the dominant card type for transactions in Europe and increasingly in Asia. Gemalto is the industry leader in EMV migration projects globally, with hundreds of thousands of EMV cards delivered daily. One of these projects included the EMV migration for credit cards in Singapore, which was completed in 2010 and proved to be a hassle-free process for consumers.

Cyril Villemin, Marketing Director, Secure Transactions-Gemalto 

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.

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Cyril Villemin

Cyril Villemin

Cyril Villemin is a Marketing Director at Secure Transactions-Gemalto.

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