The Jakarta Post
Bank Indonesia (BI) may be forced to delay enforcing the full use of chips on debit cards as technical issues remain, with banks expressing difficulties in meeting the deadline.
Replacing all existing cards, which function with a magnetic strip on the back, with new ones equipped with chips before the end of this year will be a difficult task, according to Darmadi Sutanto, chairman of the Association of Payment Systems in Indonesia (ASPI).
There are more than 100 million debit and ATM cards circulating in the country according to the latest data from BI.
'With such an enormous number of cards, it will probably take us around five years to replace all of them,' Darmadi said on the sidelines of a recent discussion.
The ATM or debit card replacement is required by a BI regulation as part of an effort to step up security measures against rampant fraud.
All existing cards must be withdrawn and replaced with new ones by Dec. 31 this year at the latest. ATMs and electronic data capture (EDC) units must also be upgraded to accommodate the new cards.
Darmadi, a former Bank Negara Indonesia (BNI) consumer and retail director, said the replacement job would be even harder to complete before the deadline as banks were still issuing the old versions of cards to new customers, a practice that could not be halted.
'Banks have to provide ATMs or debit cards for new customers, even if they are the magnetic strip version. Customers will surely want to have the card right after opening an account. So the number of cards that will have to be replaced continues to increase,' he explained.
Banks The Jakarta Post talked to also expressed concerns at the approaching deadline. They said the card personalization process would be more challenging than card procurement.
By personalizing the cards, banks adjust data on the chip to each customer's data recorded in their own databank.
A. Toni Soetirto, Bank Rakyat Indonesia (BRI) consumer business director, said the state lender was facing a huge task with its 38 million debit and ATM cards, 22,000 ATMs and more than 135,000 EDC units that were scattered across the country.
At present, BRI is listed as the lender with the highest number of cards compared to other issuing banks.
'We issue between 4 and 5 million new cards every year. So distribution is a problem for us, making sure that every customer receives the chip-equipped, personalized card,' he said.
Bank Central Asia (BCA) director retail and commercial director Suwignyo Budiman said it had already purchased around 4 million new cards to partly replace the 12 million debit cards that it had at present.
'But they are blank cards, they have not been personalized yet because we are waiting for the preparedness of our card vendor,' he said, adding that the private lender would need several years to finish the whole process.
Vendor preparedness is another technical issue. Out of 13 card vendors, nine have been certified to produce the new cards, data from ASPI reveals. Meanwhile, only three out of six ATM vendors and two EDC vendors have obtained certification to upgrade or provide the new machines.
BI deputy governor Ronald Waas said the central bank was still weighing several options before deciding on the fate of the chip deadline. 'We expect to take a final decision in late March on whether we still stick to the schedule,'
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