MANAMA, 16 September 2005 — Bahrain Monetary Agency yesterday urged the credit card issuers in the country to comply with the global deadline for implementing the new smart card technology for debit and credit cards. The EMV Integrated Circuit Card Specifications for Payment Systems, known as EMV Standards, mandated that the migration of debit/credit cards from the current magnetic strips to be chip-based, setting January 2006 as a deadline for the shift to the new technology by EMV, which comprises the world’s largest card issuers, namely Europay International MasterCard International and Visa International.

“Beyond January 2006, liability for fraudulent transactions will lie with magnetic stripe card issuers or acquirers, if it can be demonstrated that that the use of smart card technology would have prevented the fraud,” said BMA’s Superintendent, Systems Development, Riyad Al-Maraj.

“Issuers need to bear in mind that the deadline date is the date by which the whole of their card base and its supporting infrastructure should be EMV compliant,” said Maraj. Maraj who was speaking at a seminar on EMV Standards, organized by Bahrain-based Al-Faris Information Technologies Company, and co-sponsored by the BMA and The Benefit Company, which operates the national switch for automated teller machine (ATM) and point-of-sale (PoS) system, added that testing and any pilot scheme should be completed well before the January 2006 date.

Warning that delays in shifting to the new system may leave those companies vulnerable to fraud, he said that it was a certainty that the last card issuers to migrate will inevitably be the concentrated target of fraudsters as the strong security of EMV smart cards closes the window of opportunity for crime. He added that the current focus of the BMA was to ensure that the issuers of credit cards are able to meet the mandated deadline, as credit cards pose a greater risk and are more likely to be the target of any fraudster, he said.

“The BMA is working with credit card issuers and infrastructure providers to ensure that Bahrain issuers are able to meet the global deadline,” he said. “Migration to the new technology by the mandated deadline will also enable our institutions to strategically position their business to benefit from the advantages accruing from the use of the EMV Standards.”

Europay, Mastercard and Visa in October 1994, decided to pool their resources to combat card payment fraud and promote interoperability. By 1996 they published a set of security and interoperability standards for the smart card called EMV that aimed to offer credit card holders better security, faster service, and multiple applications on the same card.

The cost of switching to the new technology for some local banks here could run in the hundreds of thousands of dollars and that might result in the new standards not being fully implemented by the beginning of the year, which has promoted the recent call by BMA officials who been marketing Bahrain as the financial hub to region, in face of growing competition by neighboring countries like Qatar and Dubai who been trying to increase their share of the financial market in the gulf region.

Experts here said that the banks were likely to comply first with the acquiring side of the process rather than the issuing side where they would upgrade their infrastructure machinery to accept EMV standard cards but they will not issue such cards immediately.