Công văn 8458/NHNN-TT

In order to ensure security, safety, prevent and limit any loss that may arise in the process of providing and using card services, the State Bank of Vietnam (SBV) has issued the Circular No. 41/2018/TT-NHNN dated December 28, 2018 of the State Bank of Vietnam, amending and supplementing the SBV’s Circular No. 19/2016/TT-NHNN dated June 30, 2016, regulating banking card operations (Circular 41), under which the roadmap for transition to the chip industry for card-accepting devices operating in Vietnam and domestic magnetic cards in circulation issued by card issuers in Vietnam. Recently, SBV has been known of several news on several newspapers that “Magnetic ATM cards will be officially discontinued and not accepted at transaction points nationwide according to the SBV’s Circular No. 41/2018/TT-NHNN”. Pursuant to current legislative regulations, SBV recommends that card issuers, card payment organizations, electronic card switching, clearing and settlement organizations pay attention to and implement the following:

- Under the SBV’s Circular No. 19/2016/TT-NHNN dated June 30, 2016, regulating bank card operations (already amended and supplemented), there is a roadmap for transition from magnetic cards to domestic chip cards for card issuers and card payment organizations, specifically including:

+ Card issuers will convert cards with BIN issued by SBV (domestic cards) in circulation in compliance with the basic standards for domestic chip cards and, from March 31, 2021, card issuers issuing domestic cards in circulation must comply with these basic standards for domestic chip cards.

+ Card payment organizations must alter their ATMs and card processing devices at points of sale operating in Vietnam in compliance with the basis standards for domestic chip cards.

Thus, in order to accelerate the transition to domestic chip cards, the Circular No. 19 (already amended and supplemented) stipulates the responsibilities of card issuers for implementing the transition roadmap from domestic magnetic cards to domestic chip cards in circulation and stopping issuance of domestic magnetic cards after March 31, 2021 without setting forth any regulation on stopping or refusing card transactions for domestic magnetic cards in circulation (these cards remain in use) issued by the card issuers in Vietnam; at the same time, stipulates the responsibilities of card payment organizations for implementing the roadmap for alteration of ATMs and point-of-sale (POS) terminals operating in Vietnam in compliance with the basic standards for domestic chip cards without setting out any regulation on refusal to accept domestic magnetic cards in circulation for use in transactions.

Therefore, card issuers and card payment organizations shall need to review legislative regulations, contracts or agreements between card issuers and cardholders on the issuance and use of bank cards in order to ensure that cardholders' card transactions take place in a smooth and safe manner without prejudice to the interests and benefits of cardholders, and avoid adopting policies and regulations that are contrary to law on banking card operations.

- Implementing appropriate and reasonable communication measures about the fact that, if customers hold domestic magnetic cards (cards remain valid) of which transition to chip cards by card issuers is in progress or has not yet been completed because of their failure to reach card issuers’ office to proceed or receive the chip cards, after December 31, 2021, they can continue to use magnetic cards to perform card transactions at ATMs, POSs, through Internet channels (e.g. Internet Banking), and mobile phones (e.g. Mobile Banking), or at transaction counters in accordance with law.

- In order to avoid misconception and confusion harming the interests of customers, the trustworthiness of banking activities in general and bank card operations in particular, card issuers and card payment organizations shall need to strengthen policies to encourage and help customers to convert domestic magnetic cards to domestic chip cards; communicate the superior features and safety of domestic chip cards and risks related to the continued use of domestic magnetic cards; at the same time, instruct cardholders to use other electronic payment channels, such as Internet Banking, Mobile Banking, QR Code, etc., and therefrom have appropriate approaches and measures to enable cardholders to switch to domestic chip cards at their earliest convenience.

- Cooperate with the Bank Card Branch (Vietnam Bankers Association) and National Payment Corporation of Vietnam (Napas) in developing and issuing the Regulations on the transfer of responsibilities in the implementation of the transition from domestic magnetic cards officially in effect from January 1, 2022.

For your information and compliance./.