ECB calls for chip-only cards

ECB calls for chip-only cards

To cut fraud, cards issued in the single euro payments area (Sepa) should only use chips, not mag-stripes, says the European Central Bank (ECB).

At a joint conference with representatives of Austria's Oesterreichische Nationalbank (OeNB), the ECB's Gertrude Tumpel-Gugerell stressed the importance of security within Sepa and recommended that issuers should ditch mag-stripes from cards.

Tumpel-Gugerell also repeated her calls for the creation of a new European card scheme to compete with established, US-based players Visa and MasterCard.

The ECB executive board member once again took an opportunity to lament the slow migration to Sepa and call for deadlines of January 2013 for credit transfers and January 2014 for direct debits.

Wolfgang Duchatczek, vice governor of the OeNB, backed Tumpel-Gugerell on chip-only cards and also confirmed the establishment of a purpose-built national clearing house, that should be operational by November and will help facilitate full migration to Sepa.

Meanwhile, the European Savings Banks Group has complained about plans to ban interchange fees for direct debit transactions in the migration to Sepa. The association has set out its own proposals built on previous work from the European Parliament.

It wants a multilateral interchange fee with the option for payers' payment service providers to claim a different but capped amount if they can justify such fees.

You can read the proposal here:» Download the document now 417.8 kb (PDF File)

Comments: (2)

Adam Nybäck
Adam Nybäck - Anyro - Stockholm 13 May, 2011, 16:08Be the first to give this comment the thumbs up 0 likes

Chip-only sounds like a great idea for lots of card products. Late adopters who do not have an EMV-terminal can enter the card number manually instead.

Visa Electron and Maestro still need the magstripe though since they generally do not allow manual entry. That magstripe doesn't need to be on the same card though (actually, I would prefer to not have the CVV2/CVC2 on the same card as well, but that's another story).

The only issue I see is that some ATMs may still require the magstripe even though they use the chip. That was my experience two years ago both in Thailand and Sweden after the magstripe was rendered unreadable. I could still use the chip in POS-terminals but the card was declined in all ATMs.

Nick Collin
Nick Collin - Collin Consulting Ltd - London 13 May, 2011, 17:44Be the first to give this comment the thumbs up 0 likes

Excellent proposal!  The current hybrid world of chip + mag stripe is complicated, less secure and ultimately unsustainable.  The sooner the whole world migrates to EMV chip and PIN the better.  The ECB proposal puts further pressure on the US to embrace EMV chip - surely it is now a question of when not if?

Is your business ready for the 10th January, 2020?
Find out more

Trending Stories