Card ban delay highlights poor communicationLocal financial companies and regulators are facing an uphill battle in their quest to replace magnetic-stripe debit cards with more secure cards bearing chips.
Meanwhile, the recent revocation, or delay, of a ban on the former just three days after it was implemented highlights problems of poor communication among Korea’s regulatory policy maker and financial watchdog.
Officials at both institutions have since admitted they need to work more closely together in areas such as providing advance notifications of developments to make the transition successful.
In tandem with commercial banks and credit card companies, the Financial Supervisory Service revoked its ban on magnetic-stripe debit cards at local ATMs on Sunday, a mere two days after it said they would no longer be valid during business hours. The financial watchdog added that the ban would be pushed back to June 1.
“The FSS had been preparing for the ban since 2004 as part of its plan to phase out the older cards, which are easily duplicated and are used in many illegal withdrawals or money transfers. This has caused financial companies to receive many complaints,” said Choi Han-mok, head of IT supervision at the FSS.
In a bid to stamp out or at least minimize the scourge, regulators and companies have been campaigning for customers to ditch their cards in favor of integrated circuit (IC) replacements featuring gold-colored chips.
However, customers rushed bank branches on Friday complaining that they had not been informed of the ban. This, coupled with a shortage of replacement IC cards, caused the authorities to backtrack over the weekend.
Moreover, local media made an issue of the fact that Kim Seok-dong, chairman of the Financial Services Commission, which oversees the FSS, found out about the ban by reading a newspaper article.
“[Kim] was informed of the ban via a newspaper article in early February, but he ordered that adequate preparations be made,” said Lee Byung-lae, an FSC spokesperson. “However, the FSS’ move was a voluntary one and there was a lack of consultation [between the FSC and the FSS] on the matter.”
The biggest problem is that there is no realistic way of informing the 9 million users of the magnetic-stripe cards that were in circulation last year. The FSS plans to phase out the cards at all ATMs by September.
“A lot of customers’ cell phone numbers have changed, and e-mails that we send to unused accounts are often filtered out as spam,” said Choi.
By Lee Jung-yoon [email@example.com]
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