The massive migration exercise involving almost 25 million credit and debit cards in the country is near complete as the July 1 deadline for the PIN and Pay system looms.

The signature verification method for such cards will officially cease at the turn of the month, with Bank Negara warning that there will be no extension on the six-month grace period.

Credit and debit cardholders will no longer be able to sign for payments at point-of-sale (POS) terminals and must key in an approved six-digit personal identification number (PIN).

Going by the figures, most Malaysians have received the message because 80% of all payments were by PIN in April, compared to 18% in December.

Bank Negara reported that the transition to the new system was going smoothly, with about 7.5 million credit cards replaced to comply with the new system.

As at end of April, 96.1% of POS-active debit cards have been replaced while 99.8% of POS terminals have been upgraded to accept PIN.

POS-active debit cards are those with at least one POS transaction over a six-month period.

The central bank said merchants who did not facilitate PIN transactions would not be able to accept payment cards.

“It is in the merchants’ and consumers’ interest to replace their POS terminals and cards respectively, and to familiarise themselves with the PIN system to avoid loss of business or suffer inconvenience after July 1.

“In the event cardholders encounter a merchant who does not provide them with the option to enter a PIN or face any problems in relation to the new system, they should report the matter to the card issuer for action to be taken,” Bank Negara said.

Cardholders were given a grace period of six months from Jan 1 to migrate to PIN-based cards.

The new system is aimed at improving the security of payment cards.

An analysis by The Association of Banks in Malaysia (ABM) showed that retailers responsible for 10% of the transactions as at the end of April had not used the PIN system.

“Cardholders should insist on entering their PIN. If the retailer does not allow it, cardholders should inform their issuing bank and give the retailer’s details.

“Additionally, acquiring banks are continuing to reach out to retailers who experience PIN bypass rates that are higher than the industry average each month.

“Retraining and other incentives may also be provided to such merchants to encourage them to allow customers to enter a PIN,” said an ABM official.

The official said that for unattended terminals, such as outdoor petrol kiosk terminals, a transaction can only be completed once the customer has keyed in the correct PIN.

On signature debit cards yet to be replaced with PIN-enabled ones, ABM said the common reason was a reluctance to change.

“While these cards can still be used at attended terminals until June 30, they will be declined from July 1,” the official said.

Since 2015, Bank Negara has been conducting a series of initiatives to increase public awareness on the implementation of the PIN system.

The central bank also worked closely with the Association of Islamic Banking Institutions in Malaysia and National Cards Group to closely monitor the progress of the migration exercise.

Last year, there were 383.8 million credit card transactions, amounting to RM118.53bil, compared to 359.6 million transactions with a combined value of RM112.66bil in 2015.

Debit cards saw 107.5 million transactions, amounting to RM22.52bil that year, compared to 90.1 million transactions with a total value of RM19.96bil in 2015.

Source:
courtesy of THE STAR

by ROYCE TAN, RAHIMY RAHIM, AISYAH NABILAH

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