Central bank tightens watch on compliance to EMV shift

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is set to go hard on banks that fail to shift to the mandatory Europay-Mastercard-Visa (EMV) technology to the detriment of their clients suffering interoperability issues.

BSP Deputy Governor Nestor Espenilla Jr. said banks that fail to comply with the shift to the EMV technology on time would have to earmark funds for possible losses.

“They have to estimate how much are the possible losses due to fraud because of not being EMV compliant. They will have to set up provisions for possible losses,” he said.

The incoming BSP governor who currently heads the central bank’s Supervision and Examination Sector said banks that fail to comply with the scheduled shift to the EMV technology should set up a fund for operational risks.

“That’s one new element,” Espenilla added.

EMV is a global security standard for payment transactions that is more secure than a magnetic- stripe card wherein stored information is static and can be copied with relative ease and cloned by fraudsters.

All BSP supervised financial institutions were given until Jan. 1 to migrate to EMV technology in order to drastically reduce, if not totally eliminate, fraud due to card skimming and counterfeiting as it provides cardholders better protection from unauthorized access to their accounts.

However, the shift to the EMV technology among financial institutions were not synchronized thereby resulting to interoperability issues particularly with regards to chip and PIN or chip and signature transactions.

Several banks have yet to comply with the EMV certification of Bancnet that covers the banks’ host systems, ATMs and chip cards.

He added the BSP has directed Bancnet to monitor banks switching off their systems to minimize liability shift.

“We will require Bancnet to monitor if banks are switching off. To minimize the risk, they don’t accept other cards but that would be monitored now,” he warned.

He said the fraud loss provisioning would encourage banks to strictly stick to the EMV shift schedule.

“There will be fraud loss provisioning and this will motivate banks to expedite the [adoption],” he said.