All commercial banks switch to chip-based cards

Kathmandu, November 15

All 28 commercial banks operating in the country have switched to chip-based debit and credit cards from the traditional magnetic stripe cards.

Nepal Rastra Bank (NRB) Spokesperson Laxmi Prapanna Niraula informed that commercial banks have complied with the central bank’s direction ahead of the given deadline.

After an incident in which Chinese hackers withdrew millions of rupees from ATM kiosks of different banks and considering the glaring lapses in security related to the banking system, the central bank, on September 5, had directed banks to provide their customers only chip-based cards within three months.

Concluding that use of magnetic stripe cards were one of the many challenges facing banking security, NRB had asked banks and financial institutions to replace such cards with chip-based cards, which are comparatively more secure.

Chinese hackers were found to have looted banks a few months ago by using magnetic stripe-based cards of different banks. Along with replacing magnetic stripe debit and credit cards with the chip-based cards, commercial banks have also stopped issuing the unsecured magnetic stripe-based cards, informed Niraula.

Following the incident, NRB had also asked banks to make all point-of-sale (PoS) terminals and automated teller machines (ATMs) chip-readable and ensure 24/7 surveillance at ATMs. “Banks are also upgrading their PoS terminals and ATMs,” he added.

Experts have been saying that domestic firms, including banks, should make ample investment in information and technology (IT) security to cope with possible security risks, including malware threats. As per them, security management among a majority of domestic firms is weak as the management gives low priority to upgrade and strengthen the company’s IT department and IT staffers.

However, NRB is preparing to make it compulsory for banks and financial institutions to invest a certain percentage of their profit in IT security, as per NRB officials.

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