Bangko Sentral ng Pilipinas will require banks to put up provisions for possible losses that could be incurred due to their delayed migration from the current magnetic stripe cards to the more secure EMV or Europay Mastercard Visa chip cards.
Incoming Bangko Sentral Governor Nestor Espenilla Jr., who will succeed outgoing Governor Amando Tetangco Jr. on July 3, said the loss provisioning would be equivalent to the loan loss provisions set up by banks. He said it would also be useful for operational risk.
“If banks are already delayed in terms of compliance with the EMV migration, they have to estimate the possible losses due to fraud because of not being EMV compliant… that is equivalent to loan loss provisions. They will have to set up provisions for possible losses,” Espenilla said.
He said there would be a final and ‘hard deadline’ for banks to completely migrate their cards to EMV and the regulator’s move to require the lenders to set up loss provisioning would “motivate banks to expedite the adoption [or migration] to EMV.”
