B

ank Indonesia (BI) may extend the deadline for the country'€™s commercial banks to use chip technology for their debit cards in response to the need for a longer migration period from the current technology, the central bank'€™s senior official executive has said.

According to a central bank regulation issued in 2014, all debit cards issued by local banks should use chip technology beginning Jan. 1, 2016.

'€œHowever, our evaluation showed that the migration needs a longer time, so we are reviewing the policy, which will be revised and issued as a new regulation before the end of this year,'€ said BI deputy governor Ronald Waas.

All existing ATM and debit cards using '€œmagnetic stripe'€ technology must be withdrawn and replaced with new ones by Dec. 31 this year at the latest, while ATMs and electronic data capture (EDC) units should be upgraded to accommodate the new cards.

The mandatory use of the chip technology is part of the central bank'€™s efforts to step up security measures against rampant fraud.

BI required the use of chips on credit cards in 2010 after the country'€™s banking industry saw a rising trend of fraud and hacking.

Ronald said the central bank, which supervises the country'€™s payment system, calculated that there were about 119 million debit and ATM cards circulating in the country, making a wide-scale migration into chipped cards a difficult task.

Aside from changing all debit and ATM cards, Ronald said the change would need widespread upgrades of ATMs and EDC machines, which number 97,000 and 1 million, respectively, nationwide.

'€œThis effort for change should be managed with better organization as we don'€™t want any harm to occur to customers due to some parties seeking to benefit from the migration,'€ Ronald said.

The country'€™s big banks, which serve millions of customers, such as Bank Rakyat Indonesia (BRI), Bank Central Asia (BCA) and Bank Mandiri, have stated they are basically ready to conduct the migration, while also voicing concerns about their own particular technical issues.

BRI corporate secretary Hari Siaga Amijarso said BRI was continuously discussing with BI and members of the Association of Payment Systems in Indonesia (ASPI) about issues relating to being the lender with the most customers '€” 52 million '€” which would require a huge amount of funds during the migration efforts.

'€œChipped cards are slightly more expensive because they have embedded data, creating more controllable and secure technology. However, I don'€™t know the exact price for each card currently,'€ Hari said.

Hari said BRI had calculated the exact time needed for the full migration and implementation, but declined to mention the total cost needed for the program, adding that '€œwe remain with our efforts to accelerate the process, because this is part of our services to customers.'€

Parwati Surjaudaja, president director of OCBC NISP, a private medium-sized lender owned by Singaporean giant OCBC Bank, said it had prepared the infrastructure needed for the implementation, which would improve security for its customers.

BI also requires local banks to use six-digit PINs for credit card transactions as part of its efforts to improve security.

The deadline for the full application of six-digit PINs has also been extended until 2020, from January this year, as issuers and users need more time to prepare for the total implementation of the new system.