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Bankers say shifting to use chip cards unnecessary at present   2009-09-09 - VietNamNet/TBKTVN

Chairwoman of the Vietnam Card Association Nguyen Thu Ha believes that replacing magnetic cards with chip cars is not urgent, and warned that it will cost commercial banks big sums of money.


Ha, in a recent interview with local newspaper Thoi bao Kinh te Vietnam, said that it is not imperative for banks, which mainly issue cards to be used in the domestic market, to replace magnetic cards with chip cards, because card holders only use basic services of withdrawing money and making payments. Meanwhile, it is very costly to replace magnetic cards with chip cards.


For example, a magnetic card can be purchased for UScent3, while the price of a chip card is $3-4.


If replacing cards, banks will not only have to pay for cards, but also have to spend money to upgrade related equipment and the finance switching systems which enable the connection to ATMs. It is estimated that the upgrading of every ATM will cost $1,000 and the upgrading of every POS some $100.


However, Ha, who is also Deputy General Director of Vietcombank, which is now holding the biggest card market share, stressed that the commercial banks which have big numbers of clients who travel abroad should replace cards.


Ha admitted that there is a high risk with magnetic cards of being counterfeited. She said that the banks that issue magnetic cards will have to take responsibility if card holders travel abroad and the cards are counterfeited in foreign countries and money is stolen.


The Vietnam Card Association has also recommended banks to shift to use chip cards, but just for international cards. In the last few years, some commercial banks have lost big sums of money as their clients made payments in foreign countries and their magnetic cards were counterfeited.


Ha many times repeated that commercial banks need to first consider their financial capabilities. Meanwhile, Ha cannot see any problems regarding mastering the new technology, saying that banks will be able to easily learn the technology and manage the systems.


Another significant thing is that if using chip cards is a prevailing trend, and clients only feel safe when using chip cards, banks will have to shift to use chip cards or they will lose clients.


However, Ha has affirmed that using chip cards is still safe in Vietnam.


In fact, Vietnamese banks have only been developing card services for the last five years, while they still cannot make profit from the investment since they still cannot collect fees from clients.


However, according to Ha, banks which have just begun developing card services or plan to should go straight to chip card technology.


Ha said that banks also need to anticipate the number of clients they will have. If banks spend a lot of money on the new technology while they only have limited numbers of clients, they will be setting themselves up for losses.


She also noted that now in the world, many countries, including developed ones, are still using magnetic cards.

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