The magnetic strip cards issued by Europay, MasterCard and Visa may not work in the country from November even though the cards are valid, reports The Himalaya Times. These cards include all debit, credit and pre-paid cards from the companies.
According to the rules of the companies, Banks and Financial Institutions (BFIs) must revamp their ATM terminals to make them chip-compliant by October this year. These companies are switching to chip-based cards from magnetic strip cards because magnetic strip cards are more fraud-prone as compared to chip-based cards.
BFIs have already placed purchase orders for chip reading devices to have them installed in ATM machines to meet the deadline given. They also have purchase orders for chip reading devices to have them installed in ATM machines to meet the deadline of the card issuers.
According to the rules, 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.
Bijendra Suwal, deputy general manager of IT, Cards, Remittances and Product Development at Nepal Investment Bank said, “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. And the acquirer (concerned BFI) will have to bear the loss if any fraud is committed.”
Nepal has around 1,900 ATMs and 3.52 million card users. Around 1/3 of the cards in circulation have been replaced. But for those cards that are still valid for few more years, the cards are being replaced only on request.
BFIs have been banned by the central bank from issuing magnetic strip cards from August this year.
Narayan Poudel, spokesperson for Nepal Rastra Bank said, “If the BFIs replace all the magnetic strip EMV cards in circulation with chip-based cards, it will boost the confidence of card users.”