Discontent rises against terminal migration organisation appointee


  • Business
  • Monday, 25 Aug 2003

By yvonne chong

THERE has been strong discontentment in the local payments card industry since the announcement by Rhythm Consolidated Bhd in early June that it had been appointed sole terminal migration organisation (TMO) for the EMV (Europay MasterCard Visa) migration exercise. And the situation may just get unpleasant. 

Major terminal vendors and several other players in the local payments card industry met on Friday in Kuala Lumpur to make a collective stand that they are against Rhythm as TMO. 

Rhythm, a publisher of educational and children's books with no prior experience in deploying payments solutions, may have obtained the status of TMO but getting support from the industry proved to be much harder. 

Many existing industry players, terminal vendors as well as solution and service providers, are convinced that if TMO came to pass, they would be reduced to subcontractors and eventually be driven out of business.  

Among the parties that are said to oppose the TMO deal are the top three local payment terminal players Nera Infocom (M) Sdn Bhd, GHL Systems Bhd and PaySys (M) Sdn Bhd, which have a combined market share of more than 85%, and terminal maker Schlumberger. 

The TMO deal, set up with an objective to speed up terminal migration towards EMV compliance (which is mandatory by December 2005), gives Rhythm the right to prepare, programme, install, maintain and provide services for the EMV smart card terminals to all the retail merchants in the country. 

The payments card industry, prior to this, has been purely market driven and EMV migration has been progressing steadily since 2000. The so-called ''monopoly'' accorded to Rhythm mid-way has, in a way, disturbed the equilibrium and raised concerns as to what would happen next. 

Rhythm has been trying to get support from industry players and will be having an MoU signing ceremony to form a TMO ecosystem tomorrow. 

In preparation for that, it has requested industry players to sign an undertaking to participate in the MoU. Some players reckoned signing that undertaking, when the cards had yet to be laid on the table, was tantamount to “signing a blank cheque”. 

Nonetheless, according to Rhythm managing director Teoh June Chake, the company had to date received the support of no less than twelve industry players, including Ingenico Malaysia Sdn Bhd, STS and Tricubes Computers Sdn Bhd. 

The Association of Banks Malaysia (ABM), and the banks themselves have not openly objected to, nor endorsed the TMO, though some believe the banks are fighting it in their own way.  

According to industry sources, ABM has sent letters to banks advising them to treat Rhythm as just another terminal vendor. ABM officials could not be reached for comment. 

The Bank Negara has always maintained that its jurisdiction lies in the payment system, and that the payments card terminal market has and should be a commercial decision for the banks. 

How much support Rhythm would get from the industry seems to hang on who turns up tomorrow at its MoU. 

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