Kathmandu, July 6

Though the validity period of your debit, credit and pre-paid cards may not run out for few years, the magnetic strip cards issued by Europay, MasterCard and Visa may not work in the country from November.

As per the rule of the issuers — Europay, MasterCard and Visa — banks and financial institutions (BFIs) must revamp their ATM terminals to make them chip-compliant by October this year.

BFIs have said that they have already placed purchase orders for chip reading devices to have them installed in ATM machines to meet the deadline of the card issuers. The BFIs have also already started issuing and replacing (expired) magnetic strip cards through combo cards that feature both magnetic strip and chip. Card issuers have shifted to chip-based cards from magnetic strip cards because magnetic strip cards are more fraud-prone as compared to chip-based cards.

“From November this year banks may remove the magnetic strip card reading devices from ATMs to minimise risks,” said Bijendra Suwal, deputy general manager of IT, Cards, Remittances and Product Development at Nepal Investment Bank.

As per rules of the card payment industry, the issuer is responsible for transactions that are made through magnetic strip ATMs or PoS terminals and for chip-based cards from chip-compliant terminals and PoS. “If a fraud is committed through a magnetic strip card in a chip-compliant acquiring terminal, the card issuer will not be liable to settle the account,” said Suwal, adding, “And the acquirer (concerned BFI) will have to bear the loss if any fraud is

committed.”

There are around 1,900 ATMs and 3.52 million card users in the country. BFIs have been gradually replacing the magnetic strip cards through combo cards as the deadline is approaching. However, for those whose cards are still valid for few more years, their cards are being replaced only on request, according to bankers. Around one-third of the EMV cards in circulation are already chip-compliant.

“As many cases of card fraud have been witnessed in the past, BFIs must replace all the magnetic strip cards within October because the ATM terminals are going to be chip-compliant, in line with the requirement of Europay, MasterCard and Visa,” said Suwal.

“If the BFIs replace all the magnetic strip EMV cards in circulation with chip-based cards, it will boost the confidence of card users,” said Narayan Poudel, spokesperson for Nepal Rastra Bank.

The central bank has also barred BFIs from issuing magnetic strip cards from August this year.