Singapore: Banks to speed up switch to microchip credit cards

Singapore banks had been dragging their feet in switching to microchip cards due to the hefty change-over costs.

Only United Overseas Bank (UOB), which has over one million card-holders, adopted the new technology and replaced all its cards to chip-embedded ones "an exercise that cost it $12 million".

But customer worries over security and problems getting their cards accepted in some Western European countries, where microchip cards are common, have forced banks to step up their efforts.

DBS, OCBC, Standard Chartered and HSBC said they will start replacing magnetic strip cards with microchip ones in the next few months.

Citibank said most of its credit cards will have microchips by the end of the year.

ABN Amro and Maybank are considering the option.

The bank said the entire process of switching to microchip cards will take two years or so, but most Singaporean card-holders can expect to be holding at least one microchip card by the middle of next year.

The move will help allay concerns from customers that their magnetic strip cards will be rejected in countries such as Britain, which use chip cards and personal identification numbers (PINs) to fight fraud.

There has also been growing concern that magnetic strip cards can be copied using skimming devices placed in automated teller machines (ATMs).

Such fraud cases "have been on the rise", noted Vincent Tan, DBS Bank's senior vice-president for cards and unsecured loans.

Microchip cards store encrypted data and are far more difficult to clone than magnetic strip ones.

Banks will not charge for the replacement cards, and card-holders are also unlikely to have to switch to using a PIN to make credit card purchases here, as is the practice in Britain.

This is because Singapore issuers largely intend to continue with the signature-based system as it is more convenient for customers.

"The use of a signature instead of a PIN is more prevalent internationally," added Tan.

But card-holders will still be issued with PINs so that they can withdraw cash from ATMs in Singapore and make purchases overseas, where merchants may require a PIN instead of a signature.

- By Grace Ng

Philippine Daily Inquirer

Publication Date: 27-09-2007