Vietnam has 41 banks with about 75 million magnetic stripe cards; nearly 280,000 POS machinesmost of which have complied with Chip Card Standard (EMV Standard) and the upgrade to support domestic chip card standards is not too complicated.
According to EMVCo data, by the Q4/2018, EMV Card-present chip card transaction rate globally accounted for 73.6 percent and the conversion to chip cards was an inevitable trend. For example, Malaysia converted completely to chip cards by the end of 2018. Even though the chip card had been converted to national standards, recently, Malaysia has continued to carry out the standard EMV conversion. In addition, the US converted to chip card within the past three years.
In Vietnam, in addition to gradually switching from magnetic stripe card to chip card, payment types such as waving cards, phone scanning, QR code scanning and so on are also known as contactless which have thrived in two years. According to Visa research, in the period of July 1, 2017 to May 31, 2018, the growth rate of contactless transactions in Vietnam reached 44 percent per month. Contactless Visa card transactions increased by 43 percent every month compared to the same period.
Moreover, the survey of consumers’ payment attitude received positive results, when more than half of Vietnamese people knew about contactless payment technology, 30 percent of them used it and more than two thirds were willing to try this form of cash replacement in the future.
Thus, the conversion from magnetic stripe card to chip card will continue to be promoted in the future. While magnetic stripe card technology is quite backward, criminals can easily attach devices (skimming) to ATM machine to steal data, counterfeit card, withdraw money like some recent incidents. Therefore, it is necessary to apply new technology to limit security risks and banks have plans to convert magnetic stripe card to chip card.
Nguyen Quang Minh, deputy general director of Napas affirmed: “The conversion of magnetic stripe card to chip card will limit the risk of copying and stealing card information. Statistics show that the rate of counterfeit transactions decreases suddenly when converting from magnetic stripe card to chip card”.
Besides, the replacement brought many benefits, such as safer and more secure payment transactions. In addition, banks also had favourable conditions to develop new and modern payment features for domestic card products increased the competitiveness of payment cards in Vietnam market.
However, Minh recommended that, according to the experience of the previous countries, the biggest difficulty was that the transition was prolonged, exceeding the initial roadmap, leading to asynchronous infrastructure and not being able to thoroughly handle security and fraud prevention in payment transactions. Therefore, participants needed to commit that the conversion would follow the roadmap set by State Bank of Vietnam (SBV).
Talking to the Securities Investment Newspaper, Nguyen Quang Minh said that the banking sector is one of the proactive sectors to take advantage of the achievements of Industry 4.0 to improve service quality, increase utilities for customers, and promote non-cash payments. Besides, with the legal framework ready, this would be the foundation for the modern banking trends to develop strongly in the near future.
Specifically, on October 5, 2018, the Governor of SBV signed the issuance of Decision No.1927/QD-NHNN announcing technical requirements for contact and contactless domestic chip card in Vietnam according to the basic standards for domestic chip card. The application of chip card standards would increase many features and utilities for customers, making an important contribution to promoting non-cash payment by offering changes in technology, safety and security compared to magnetic stripe card before.
In order to complete the legal framework to apply the basic standards for domestic chip card as a basis for credit institutions to carry out, on December 28, 2018, the Governor of SBV issued Circular No.41/TT-NHNN on amending and supplementing a number of articles of Circular No.19/2016/TT-NHNN dated June 30, 2019 regulating banking card activities (Circular 41), including: Card issuers and card payment organisations might comply with the basic standards for domestic chip cards when issuing cards with BIN codes issued by SBV, applicable to ATM machines and card acceptance devices at the point of sale of card payment organisations; regulate the roadmap for converting from magnetic stripe card to chip card for card issuers and card payment organisations.
On March 13, 2019, SBV issued Official Letter No.1524/NHNN-TT requesting card issuers, card payment organisations, card switching and electronic clearing organisations proactively and seriously organised the application of basic standards on domestic chip cards according to the conversion roadmap prescribed in Circular 41; required the mentioned units to ensure that card activities could take place continuously, stably and safely; and at the same time ensured the cardholder’s legitimate interests in the process of conversion. SBV also encouraged card issuers and card payment organisations to complete the application of basic standards on domestic chip cards ahead of time.
In fact, enterprises had introduced “swipe” and “contact” technology into payment operations, especially small and micro enterprises, individual business households due to their relatively low implementation costs, thus it would improve sales and service quality. For example, in the past one to two years, consumers applied a contactless payment method through Samsung Pay, QRPay, etc. at restaurants, supermarkets and retail units.
Nguyen Quang Minh said that currently The National Payment Corporation of Vietnam (NAPAS) was supporting the implementation of the conversion of chip cards for the first seven banks, namely Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Bank for Agriculture and Rural Development (Agribank), TienPhong Joint Stock Commercial Bank (TPBank), Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank) and AnBinh Joint Stock Commercial Bank (ABBank), including the deployment of card issuance system, card acceptance system, applications to connect to Napas.
Vietnam had 41 banks with about 75 million magnetic strip cards currently; 280,000 POS machines, most of which complied with EMV standards and the upgrade to support domestic chip card standards was not complicated. Napas continued to support new suppliers in card and equipment acceptance fields to assess and offer products complying with the standard set of domestic chip cards (VCCS). At that time, banks could quickly and easily select available products to save time and conversion costs.
