The top South Korean financial-services regulator has a hit a roadblock in its process of phasing out the magnetic stripe in credit cards and replacing it with a smart chip.
While the Financial Supervisory Service in January committed to a push a chip-based payment card system cards, it has met with a number of consumer complaints, according to a March 6 statement from the agency.
The regulator on March 2 was flooded with complaints and calls after it tried to block the use of mag-stripe cards in the country’s ATMs, complaints forced it to curtail that move until June.
Bank customers are unaware of the card type they are using, the regulator said who added that the phase out is not mandatory.
“They do not see the need to change their cards so quickly,” he says. “We want to ban them from using magnetic stripe cards and use chip cards to reduce security risks.”
According to the regulator, of the 49 million credit cards issued in South Korea, some 9 million have mag stripes only, and the number is not decreasing fast enough.
“The problem here is that there is not one coordinated campaign run by issuers to make sure that their cardholders get their cards replaced,” a spokesperson for the Credit Finance Association of Korea tells PaymentsSource. “Different issuers are sending different text messages, emails, letters and notices to their people, but the response has been mediocre,” he says.
Many consumers are not willing to change their cards, so mandatory changes may be needed, the spokesperson says.
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