The shift to chip

DEBIT and credit cards holders in the country will soon become accustomed to seeing their cards sans the magnetic stripe on the back, but with a chip on the front instead. This new technology is termed EMV, and it is what local banks and other fi nancial institutions have scrambled to meet.

EMV, which stands for Europay, MasterCard and Visa, is a global standard for computer chip- equipped cards. First adopted in Europe over two decades ago, it is believed to be a more secure alternative to the traditional magnetic stripe payment cards, which are prone to skimming and counterfeiting.

“The magnetic stripe on traditional credit, debit and prepaid cards contains unchanging ( static) data which can be easily copied by fraudsters via a simple and inexpensive skimming device. Unlike a magnetic stripe card, every time an EMV card is used for payment, the chip on the card generates a unique transaction code that cannot be used again,” the Bangko Sentral ng Pilipinas ( BSP) said. This feature is called dynamic authentication, which makes it difficult, if not virtually impossible, and costly for fraudsters to counterfeit EMV cards.

Data from the BSP show that some P150 billion was lost to credit card and automated teller machine (ATM) skimming in the Philippines in 2015. It was 75% of the total amount of losses linked to cyber fraud-related incidents in that year alone. This was despite the existing security measures individually put forth by local banks and fi nancial institutions.


BSP, as part of its continuing efforts to foster the development of safe, secure, and reliable retail payment systems and to uphold consumer protection in the country, issued in August 2013 Circular 808. It required BSP-supervised fi nancial institutions to migrate their entire payment network to the more secure EMV chip-enabled cards.

November the following year, it released Circular 859, under which card issuers were given until Jan. 1, 2017 to move away from the use of magnetic strip technology.

The mandated shif t to EMV standard, however, only covers card- present and contact payment transactions in ATMs, point- of- sale ( POS) terminals and other similar devices. BSP has yet to release guidelines for card-not-present and contactless transactions.

In December 2016, BSP Deputy Governor Nestor A. Espenilla, Jr. announced that “close to 100%, around 90%” of the country’s banks and other financial entities have already complied with almost all of the technical requirements of BSP’s directive, particularly in terms of software upgrades to EMV technology, and securing the

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