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Banks assess the cost of advancing card technology   2009-08-21 - VietNamNet/TP

The State Bank of Vietnam wants Vietnamese banks to replace magnetic cards with chip cards soon, but the commercial banks claim the central bank’s plan is too much too soon.


An initiative by the central bank (SBV) to replace older magnetic bank cards with new cards that have embedded microchips throughout the banking system has attracted the public’s attention. Meanwhile, commercial banks insist they have no plans to replace their magnetic cards.


The card centre chief of one prominent bank explains that replacing 200,000 magnetic international cards with chip cards took his bank three years. They have not yet considered replacing domestic ATM and point of sale cards.


The bank staffer says that the problem lies not in the $2 per card fee that users will have to pay, but in time and expense.  The bank will need at least five years and nearly $10 million to upgrade the system.


Another bank’s card centre Director called the massive, synchronous card replacement plan “impossible.”  Banks can only do this incrementally, replacing cards as they expire.


SBV believes that it will not be costly to issue the more secure chip cards. In contrast, commercial banks argue that they must upgrade computer networks and payment portals to make them compatible with the new technology. Bank staff will also have to be trained. These tasks will be expensive for banks, especially ones who joined the market without expecting high profits from card services.


General Director of Banknetvn, Ngo Ngoc Dong asserts: “If we can do it (replacing magnetic cards with chip cards), this will be a great revolution. However, banks must carefully consider both expenses and possible benefits.”


Dong thinks that it would be better not to carry out large-scale replacement at one time, but rather approach replacement on a smaller scale.


Nguyen Thanh Hang, Head of Vietcombank’s Card Centre, pointed out that if chip cards are used in Vietnam, the financial switching system will also need to be upgraded, so as to allow ATMs’ to be able to ‘talk’ to each other.


Bank customers, especially those who go abroad on business, prefer chip cards for their higher safety and security.


By June 2009, Vietnam had had 8,800 ATMs and 28,300 POS.  There are 41 Vietnamese financial institutions with payment services, which have issued more than 17 million cards. Of those, Vietcombank leads with 3.6 million cards, while Vietinbank has issued 3 million cards.

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