The Jakarta Post
Bank Indonesia (BI) announced on Thursday that it would postpone the rolling out of chip-technology debit cards until 2021 because of technical issues in nationwide implementation.
In a circular published on Dec. 30, BI revised a regulation stipulating that all debit cards issued by local banks should use chip technology beginning Jan. 1 in order to reduce digital crime in payment systems.
Under the revision, banks are now required to implement chip-technology debit cards and six-digit PINs from Dec. 31, 2021, replacing the old 'magnetic stripe' cards.
BI director of payment system policy and supervision Farida Peranginangin said the central bank decided to postpone the regulation after discussing the issue with banking industry representatives, who expressed the difficulties their organizations had faced in implementing the program.
Farida said that BI had agreed that a wide-scale conversion of debit cards and upgrades of infrastructure as well as six-digit PINs would be daunting for the banking industry.
'The banking industry has expressed their concerns that the simultaneous implementation of chip technology would cost too much and create inefficiencies as there were more than 121 million debit and ATM cards by the end of 2015,' Farida said in a press briefing on Thursday.
The central bank, which supervises the country's payment system, calculated that there were 96,900 ATMs and 960,300 electronic data capture (EDC) units as of Dec. 31, 2015, with many of them yet to be upgraded to accommodate the new cards.
In order to help the banking industry, Farida said that BI had allowed the use of magnetic stripe cards in certain conditions, namely for savings or current accounts with a maximum balance of Rp 5 million (US$358.9) under agreements between customers and the bank.
Beyond that, Farida said BI had implemented a new schedule and steps for banks to take to prepare for the changeover.
Under the new schedule, banks are required to upgrade their back-end system to accommodate chip cards before June 30, 2017, while upgrades for ATMs and EDC units should be completed by July 1, 2017.
'Magnetic stripe cards should also have six-digit PINs by June 30, 2017,' she said.
By Jan. 1, 2019, banks should have at least 30 percent of their debit cards using chip technology, followed by 50 percent by Jan. 1, 2020 and 80 percent before Jan. 1, 2021.
'This will facilitate the replacement of the remaining 20 percent of old debit cards by 2021,' Farida said, adding that the schedule had been created based on BI's calculation of the banking industry's overall capacity.
Farida said that some banks had already showed that they were ready for the new system as they had prepared new chip debit cards, but many of them still had infrastructure-related issues.
'Some banks have old-type ATMs, while others have a huge number of ATMs and customers,' she said.
Bank Rakyat Indonesia (BRI) senior executive vice president Catur Budi Harto said that the lender had prepared for the card migration program and required infrastructure gradually, adding that it was considering whether it will have to charge customers for the cost of each new card.
Meanwhile, Bank Tabungan Negara (BTN) retail funding and distribution director Sis Apik Wijayanto said the lender was ready with newly upgraded ATMs and already more than 2 million upgraded debit cards.
'All of our newly issued debit cards already use chip technology and at least 300 ATMs have been upgraded,' he said.
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