Banks directed to issue EMV cards

Cards will be preactivated to enable customers to make payments from issuance day

KARACHI:

Pakistan’s central bank on Friday made it mandatory for all banks to issue new payment cards based on the latest Europay MasterCard Visa (EMV) technology by June 30, 2021.

The cards would be pre-activated to enable customers to make payments from the first day of issuance.

Earlier, the cardholders were required to get them activated through phone banking or ATMs. In addition, there will be no need to enter PIN codes to make payments of up to Rs3,000 for online shopping or to merchants on Point of Sales (POS) through the new cards. Banks may reset the limit of PIN code free payment as per their risk policy.

The features are introduced with the aim of creating an enabling environment for online shopping (e-commerce) and reducing time of transaction over POS to merchants, according to the State Bank of Pakistan.

“To eliminate the risk of skimming of payment cards by fraudsters, the SBP has directed that ATM and POS networks in Pakistan shall only accept EMV chip and PIN compliant payment cards in the country,” the central bank said in a statement.

“The new measure is expected to promote online e-commerce ecosystem and shape consumer behaviour towards online e-commerce digital payments in the country,” it said.

The chip-based EMV debit and credit cards can also be used for loan repayment at banks as well as to pay monthly installments for car and personal loans. Earlier in 2019, the SBP had directed banks to implement 3D Secure protocol (EMV-based cards) to prevent frauds in online transactions and as a result 15 banks have already adopted this international standard for securing online transactions.

The banks which have already implemented 3D Secure (an international standard that secures online ecommerce transactions) are allowed to activate their customers’ payment cards for online e-commerce transactions without the need of specific requests for activation.

The measure, aimed at further strengthening the security of digital payments and curtailing the risk of frauds, is a culmination of SBP’s efforts that started in 2016 when it introduced a detailed roadmap for the adoption of EMV chip and PIN standard for payment cards in Pakistan. Banks have also been directed to enhance their efforts to facilitate customers in case they face any issues while using their payment cards.

“In order to promote digital payments, the SBP has been taking steps to make them more secure, introducing new features and promoting their use,” the SBP statement read.

“Customers will be able to lodge complaints through digital channels without the need to visit a bank branch. The State Bank has directed the banks to implement all these measures by June 30, 2021.”

In a bid to turn small payments easier and quicker, the SBP has allowed banks to relax the requirement of entering PINs for transactions of up to Rs3,000.

“Banks, depending on their risk management policies, may decide the amount which may be exempted from PIN requirement on card transactions including contactless payments.”

Enhancing the drive towards digitisation of payments, the SBP has directed all banks/microfinance banks to take measures to facilitate their borrowers in making repayments of loans such as consumer loans and auto loans digitally using internet and mobile banking applications of any bank.