Race against time in ‘ PIN & PAY’ mi­gra­tion

> Credit cards lead debit cards in switch to per­sonal iden­ti­fi­ca­tion num­ber-based sys­tem by Dec 31

The Sun (Malaysia) - - SPEAK UP - BY EE ANN NEE

KUALA LUMPUR: With only two more months left to the end of the year, it will be a chal­leng­ing task for Malaysia to meet the tar­get for mi­gra­tion to per­sonal iden­ti­fi­ca­tion num­ber-en­abled (PIN-en­abled) pay­ment cards, based on cur­rent progress.

Banks and non-bank is­suers of pay­ment cards are re­plac­ing sig­na­ture­based cards with PIN-en­abled cards and are com­mit­ted to com­plet­ing the process by Dec 31.

Even as ef­forts are be­ing in­ten­si­fied to meet the dead­line, it is un­der­stood that only just over 50% of credit cards have been re­placed so far and only 35% of bank-owned ter­mi­nals can sup­port the PIN sys­tem, known as “PIN & PAY”.

Na­tional Cards Group chair­man B. Ravintha­ran ( pix) said the mi­gra­tion to PIN & PAY is pro­gress­ing well, but pointed out that debit cards are fall­ing be­hind credit cards.

“Debit cards (mi­gra­tion) are fall­ing be­hind be­cause cus­tomers need to go to a (bank) branch to col­lect (their new cards), while most of the credit cards are couried to cus­tomers. Cus­tomers don’t see why they should go to a branch to col­lect their new cards and, as a re­sult, the con­ver­sion rate for debit cards is much lower,” he told Sun­Biz in an in­ter­view re­cently.

Ravintha­ran said meet­ing the yearend dead­line for credit cards, how­ever, should not be a prob­lem as banks will courier the new cards to cus­tomers and credit cards hold­ers just have to ac­ti­vate their new cards.

“Debit cards may be a chal­lenge but banks are find­ing other ways to get cus­tomers to get the cards. Some banks are do­ing it on­line whereby cus­tomers don’t have to go the bank, while oth­ers have kiosks that are nor­mally open dur­ing week­ends and non-bank­ing hours. Most banks have ex­tended bank­ing hours and some banks are also open­ing dur­ing week­ends. Some have it done in shop­ping malls.

“Banks are do­ing all th­ese ini­tia­tives and we’re also ini­ti­at­ing heav­ily on so­cial me­dia, try­ing to get celebri­ties to en­cour­age fol­low­ers to have their cards re­placed, es­pe­cially debit cards,” said Ravintha­ran, who is also May­bank ex­ec­u­tive vice-pres­i­dent and head of cards for group com­mu­nity fi­nan­cial ser­vices/fund­ing, de­posit and ban­cas­sur­ance.

On point-of-sale (POS) ter­mi­nals, he said one or two banks have com­pleted the up­grad­ing of ter­mi­nals due to the smaller base.

The cost of up­grad­ing of bankowned ter­mi­nals is borne by the banks them­selves while petrol com­pa­nies will foot the bill of up­grad­ing POS ter­mi­nals at petrol sta­tions, he said. Banks will work with mer­chant part­ners to coin­vest in self-service kiosks.

“For mer­chants, the im­por­tant thing is ed­u­cat­ing the cashiers. A lot of time and ef­fort is spent by banks to ed­u­cate cashiers, es­pe­cially in de­part­ment stores, hy­per­mar­kets and su­per­mar­kets be­cause the turnover of cashiers is high and they need to be con­tin­u­ously ed­u­cated. Some mer­chants need to go back three to four times to ed­u­cate cashiers on how to use th­ese PIN trans­ac­tions,” said Ravintha­ran.

There are eight mil­lion credit cards in cir­cu­la­tion and 20 mil­lion ac­tive debit cards that must be re­placed by Dec 31, 2016, while non-ac­tive debit cards have more time, un­til Dec 31, 2017.

In Malaysia, May­bank has the high­est card is­suance in the in­dus­try with 1.7 mil­lion credit cards and 10 mil­lion debit cards. It is spend­ing a sig­nif­i­cant sum on the ex­er­cise, and a big por­tion of it will be for card is­suance. It is un­der­stood that a pay­ment card costs RM11-RM15 de­pend­ing on card type.

“It’s an ex­pen­sive af­fair. We need to change all the cards and most ter­mi­nals, we have to ed­u­cate cus­tomers, in­cur the cost of the plas­tic, and couri­er­ing cards. Staff also need to work late be­cause we’re open on week­ends and af­terof­fice hours,” Ravintha­ran ex­plained.

He said a ter­mi­nal can cost RM500 (ba­sic) to RM1,700 (con­tact­less, all-in­one) and the up­grad­ing of ter­mi­nals con­sists of a com­bi­na­tion of soft­ware as well as re­place­ment.

Con­tact­less pay­ment sys­tems use near-field com­mu­ni­ca­tion for mak­ing se­cure pay­ments and the em­bed­ded chip and an­tenna en­able con­sumers to wave their cards or hand­held de­vice over a reader at the POS ter­mi­nal. Low-value con­tact­less trans­ac­tions (be­low RM250) do not re­quire a PIN. Con­tact­less pay­ments are usu­ally found in hy­per­mar­kets, su­per­mar­kets and fast­food restau­rants to speed up queues.

“In Malaysia, 10% of the ter­mi­nals are con­tact­less and it’s growing but in ma­tured mar­kets, al­most 80% of trans­ac­tions are con­tact­less. There will come a time in Malaysia when banks in­stall the ter­mi­nals and there will be more and more such ter­mi­nals avail­able and you’ll see more and more peo­ple us­ing such de­vices,” said Ravintha­ran.

He said more ter­mi­nals are be­ing in­stalled to pro­mote elec­tronic pay­ment. Banks are in­stalling ter­mi­nals in mer­chant lo­ca­tions or seg­ments which pre­vi­ously did not ac­cept cards, such as fast-food restau­rants.

Ravintha­ran said PIN & PAY has been widely used in the UK, France for about a decade, as well as in Canada, Aus­tralia and New Zealand. Malaysia is the first coun­try in Asean to im­ple­ment PIN & PAY.

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