KUALA LUMPUR: Bank Negara may take action on financial institutions should they fail to meet the central bank’s year-end deadline to complete the migration from signature to chip and personal identification number (PIN)-enabled payment cards.
Bank Negara payment systems policy department director Tan Nyat Chuan said although the situation had not occurred where banks were not making sufficent efforts for the migration, it reserved the right to deal with those who caused blunder in its efforts to reform the card payment industry.
“We will look at the individual bank and to what extent it has not made ample efforts to comply to our deadline.
“We reserve the right to take action, but will have to review it on a case-to-case basis and look into the inconvenience caused by inaction or insufficent action taken by the banks,” Tan said on the sidelines of a briefing on migration to PIN-based payment cards yesterday.
However, he was unable to provide answers to what actions the central bank would resort to, as this would be assessed and discussed internally, and whether a formal action was really needed.
Bank Negara’s data shows that 25 million cards have yet to be replaced and that constituted 7.6 million credit cards and 17.8 million debits cards, according to Tan.
The central bank has made it clear early this year that it is working on reforming the card payment space for a more secure transaction, which would see Malaysia going cashless.
The Payment Card Reform Framework (PCRF) effective July 1, 2015 issued by Bank Negara aimed to address market distortions and ensure that cost of accepting payment cards is fair and reasonable.
Under the PCRF, the interchange fees for payment cards were capped. For international debit cards, Tan said, this was lowered from 1% to 0.21% and 0.4% to 0.15% for local debit cards (MyDebit).
“For credit cards, this was reduced from 1.8% to 1.1% and we intend to bring it down further to 0.48% by 2020,” he said, adding that measures were also launched to enhance the transparency and competitiveness in the payment card market.
Meanwhile, Tan said that to-date, the industry has 43 million ATM cards and only almost half of it were active. The rest were still dormant awaiting for cardholders to claim them.
The industry, he said, is witnessing challenges involving the issuers of cards, cardholders, acquirers (banks who provide payment terminals to the merchants) and merchants.
“The challenge is changing terminals and reissuing cards. As such, the stakeholders have to play their roles efficiently for a successful migration exercise,” he noted.
Tan urged credit card holders who were issued with new chip and PIN-enabled cards to activate them within three months, while debit card holders should reach out to the respective banks for their new cards before the year end.
“Banks have been sending out notices and reminders to cardholders on this.
“Cardholders should also start using their PIN-enabled cards immediately so that we can flush out any teething issues before we phase out the signature payment method,” said Tan.
Those travelling abroad were advised to contact their banks for advice because there were countries that still accepted signature.
On the market developmental fund organised by both Visa and Master Card for the deployment of point-of-sales (POS) terminals, he said the funds would come from banks and it aimed to have a network of 800,000 terminals by 2020. The market has about 307,000 POS terminals as at end-September.
Bank Negara has given a grace period until June 30, 2017 to allow retailers and cardholders to get familiarised with the PIN method.
For queries and complaints, contact the Association of Banks hotline number 1300-88-9980 or visit www,abm.org.my.