The Bangko Sentral ng Pilipinas gave banks a ‘hard deadline’ of June 30, 2018 to fully comply with the migration of ATM, debit and credit cards from the current magnetic stripe to the more secure Europay Mastercard Visa or EMV chip cards.
Bangko Sentral on Thursday issued the supplemental guidelines to speed up the EMV migration of financial institutions.
“BSFIs [Bangko Sentral-supervised financial institutions] are given until 30 June 2018 to fully comply with the EMV requirement. Failure to do so will subject BSFIs to monetary sanctions provided under relevant provisions in the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions,” the regulator said.
It said non- or partially-compliant BSFIs were mandated to book provisions for probable fraud losses starting Sept. 30, 2017 until full compliance was achieved.
“To raise awareness as well as manage customers’ expectations on the replacement of their payment cards, BSFIs should intensify their public awareness programs leveraging on all available communication channels,” it said.
Bangko Sentral said the information should clearly indicate the date when EMV cards are available and ready for pick-up by their clients as well as the related procedures for replacing magnetic stripe cards and distributing EMV-compliant cards.
“BSFIs are further expected to develop strategies to entice or force clients to replace their old cards with EMV cards [i.e. deactivation of existing cards by certain date, offering of rewards/freebies, and/or liability shift for skimming incidents],” it said.
Incoming Bangko Sentral Governor Nestor Espenilla Jr., who will succeed outgoing Governor Amando Tetangco Jr. on July 3, said the regulator would require banks to put up provisions for possible losses that could be incurred due to their delayed migration to EMV cards.
Espenilla said the loss provisioning would be equivalent to the loan loss provisions set up by banks. He said it would also be useful for operational risk.
“If banks are already delayed in terms of compliance with the EMV migration, they have to estimate the possible losses due to fraud because of not being EMV compliant… that is equivalent to loan loss provisions. They will have to set up provisions for possible losses,” Espenilla said.