(Photo: Xinhua/ICBC MasterCard Peony Chip Card, issued by the Industrial and Commercial Bank of China Limited on Friday)
China's largest commercial bank launched the nation's first chip bank cards on Friday that are compliant with the EMV standard, currently the safest bank card standard globally.
The introduction of the ICBC MasterCard Peony Chip Card, issued by the Industrial and Commercial Bank of China Limited (ICBC), made it the first Chinese bank to join a global trend to upgrade card systems to the new EMV technical standard.
It was formulated by the world's leading credit card organizations of Europay, MasterCard and Visa.
"The launch of the card is of key importance to improving the security levels of China's bank cards, promoting the development of the bank card industry, and preventing problems overseas bank card users have transferring into China," said Xu Luode, director of the Payment and Settlement Department at the People's Bank of China (PBOC).
As more and more countries shift from stripe card standard to the EMV standard, which substantially enhances transaction security and operation efficiency, and boasts multi-application capabilities, Chinese banks are facing the possibility of higher losses from transaction fraud.
Europe and many of China's neighbours have completed their EMV changeover, herding many international card fraudsters to countries like China, where bank cards still use the older system. Fraudsters that used to be active in Malaysia were already found on the move last year to Beijing, sources said on Friday.
"If China doesn't move fast, it may become the world's centre of bank card fraud," Zhang Zhimin, a division chief with the PBOC's Technology Department, told China Daily at the launch ceremony.
As Asia is scheduled to adopt a liability shift mechanism at the beginning of next year, which stipulates that banks which have not yet adopted the EMV standard be responsible for any loss from counterfeit cards, Chinese banks need to move faster in their efforts to upgrade card systems.
"All the domestic banks will have to be prepared for that," said Xu Zhihong, president of the ICBC's Card Centre.
Other Chinese banks are also moving to bring their systems into compliance with the EMV standard. The central bank is encouraging local banks to make the changeover, but is not pushing them too hard given the huge cost of system upgrades.
Bank card issuance in China totalled more than 900 million yuan (US$111 million) at the end of October, the vast majority of which are stripe cards. Replacing a stripe card with a chip card will cost as little less than 50 yuan (US$6.2) per card.