Bank headache with the cost of moving a magnetic card to a chip card

The price of billet making chip cards is 20-30 times more expensive than the price of billet making magnetic cards. Although the cost of converting ATM cards made from magnetic cards to chip cards is huge, this is a necessary job for the benefit of cardholders.

According to the representative of banks (NH) in Vietnam, the biggest cost in converting cards is the cost of making embryos. Specifically, the cost of making ATM cards with magnetic cards only costs VND 1,000-2,000 / card, the cost of making chip cards is up to VND 20,000-30,000, equivalent to US $ 1-1.5 / billet.

Therefore, the cost of changing to chip cards is huge, especially for state-owned commercial banks that currently have 70% of cards circulating in the market. For example, Vietcombank currently has about 14 million cards, so at the above billet price, the total card exchange cost will be about VND 420 billion.

Similarly, banks like VietinBank need about VND 411 billion in resources to convert the entire amount of 13.7 million magnetic cards to chip cards. Agribank and BIDV with 11 million cards and nearly 10.4 million cards, respectively, the cost of buying chip cards will be VND 330 billion and VND 309 billion respectively.

According to updated data of the State Bank, there are currently more than 101 million commercial bank cards of all types, of which more than 85 million domestic debit cards (ATM cards) are made of magnetic cards. According to the SBV’s figures, by the end of September 2018, the country had 18,173 ATMs and more than 294,500 POS machines. As such, older ATM and POS models that do not have chip card reader will have to be replaced.

In the amended Circular 41, the SBV required that by December 31, 2019, at least 30% of the cards with BIN issued by the State Bank of Vietnam from card issuers must comply with the local standard for domestic chip cards. .

Because the time for conversion according to the Circular of the State Bank is very urgent, all banks are rushing to complete the upgrade / replacement of card system, ATM system, card acceptance system as well as workpiece selection. Chip card matching. Most banks have difficulty in matters of workload, time to complete urgently.

Talking about this, Mr. Dao Minh Tuan – Deputy General Director of Vietcombank, said that to accept chip cards, banks will have to upgrade the current card acceptance points. In Vietnam market, most of the card acceptance points are now accepting international chip cards, accordingly, the upgrade to accept domestic chip cards will also be implemented accordingly. In particular, the conversion will not affect Vietcombank’s current card acceptance system.

“Currently Vietcombank has about 14 million cards in circulation. The cost of this conversion will be very large, Vietcombank will consider the balance between costs and benefits in this conversion. Depending on the size and volume of cards / equipment of each bank, the cost for conversion may vary “- Mr. Tuan shared.

Banks will consider the cost issue to apply the conversion issuance fee accordingly. To ensure cost effectiveness, banks will also divide into several stages, giving priority to conversion for customers who have regular transactions first. At the same time, the bank will also recommend to the SBV to work with partners providing card embryos to apply a floor fee suitable for banks with a large number of card conversion.

(Source: Banking and Finance Newspaper)