ABM: In response to the article "It is important to educate credit card users on PIN" published in The Star

June 24, 2016
Reference is made to the above article by Mr David Tan, Star Media Group news editor (business) North, published in The Star on Monday, 20 June 2016.

The Association of Banks in Malaysia (ABM) would like to thank the writer for raising a number of points regarding the use of Malaysian PIN cards overseas of which Malaysian travellers need to be aware. However, we would like to respond and add some context to the matters highlighted.

1. Complaint that Malaysian banks are not doing enough to educate customers on the use of PIN
1.1 In line with the market wide project to change the way customers are verified when using their payment cards at domestic point of sale (POS) terminals, all credit, debit, charge and prepaid cards in Malaysia that currently support signature, will be replaced with new cards programmed to support PIN. All terminals need to be upgraded to support the entry of PIN. This industry wide transition started in late 2015 and is expected to be completed by 1 January 2017.

1.2 While some debit card users do enter a PIN today at POS, most debit cardholders, and all credit cardholders sign. Card issuers/banks are planning to execute a communication and education programme that changes the behaviour of cardholders such that they enter a PIN instead of signing when using their card at POS.

1.3 This change is being referred to as PIN & PAY. Wherever the PIN & PAY logo is displayed, the customer can expect to enter a PIN at the terminal if his card has been upgraded to support PIN. PIN & PAY will also be the vehicle by which customers are educated on what to expect with the introduction of PIN.

1.4 An effective communications plan, in fairness to the card issuers, has to do with timing and the current stage at which the migration to PIN is at within Malaysia. Thus, the timing of the execution of the PIN & PAY communication program is critical. Too early and card issuers will very quickly lose the attention of their audience. Too late and card issuers will risk causing confusion and disruption.

1.5 Hence, the key to a successful education campaign is to start once there is sufficient critical mass of PIN enabled cards and terminals deployed in the market, such that when a customer receives a new PIN enabled card, he is prompted for PIN frequently enough that card issuers can grab his attention. The volume and visibility of the PIN & PAY message can then continue to be increased as the number of PIN enabled cards and terminals are added in the market.

1.6 Mass deployment is only just about to commence. From the middle of 2016, PIN enabled terminals will be deployed in greater numbers, and customers will start to see the PIN & PAY logo at those terminals supporting PIN. Customers with PIN enabled cards will be prompted for PIN when using their card at POS terminals that have been upgraded to support PIN. By the end of 2016, all cardholders should have replaced their signature card with a newly issued PIN card and most terminals should be upgraded.

1.7 However, it is also important to note that the industry has not been totally quiet to-date in this respect. An industry PIN & PAY website (PIN & Pay) containing all the information necessary for cardholders and retailers to understand the change to PIN was established in November 2015. Individual card issuers have also updated information via internet banking and websites, and communicated to every customer that receives a new PIN enabled card by providing a starter pack explaining what the customer must do to activate the card and select his PIN.

2. Malaysian customers who have already received a new PIN card but have not yet selected a PIN, may not be able to use their card in an overseas terminal that requests PIN
2.1 The PIN & PAY website does contain advice to Malaysian cardholders travelling overseas (www.pinandpay.com.my/en/news.html?tag=cardholder-travel). All card issuers which have been issuing PIN enabled cards direct cardholders who receive a new PIN card to the PIN & PAY website.

2.2 Be that as it may, we do acknowledge the issue which the writer raises and would like to reiterate the following points.

  • If a Malaysian cardholder with a new PIN enabled card does travel overseas, it is quite possible given the current stage of the Malaysian migration to PIN, that the first time he is prompted for PIN will be at an overseas POS terminal.
  • Most markets have terminals with a function that enables the retailer to allow the customer to sign if he does not know his PIN, leaving it to the issuing bank to approve or decline.
  • Unfortunately, even if this function is available, many retailers in markets where PIN is enforced domestically, either do not use this function frequently enough, or refuse to use it because they do not understand that although PIN is enforced domestically, they may still use it for an overseas card.
  • Equally, if the Malaysian customer is not familiar with PIN, he may not know he has the right to bypass the PIN entry and sign. In such an environment, where it is a case of a first time PIN card customer not sure of, or not knowing his PIN, meeting a retailer that only understands enforced PIN, potentially complicated by language differences, it is likely that the card transaction may not be completed.
  • A Malaysian cardholder with a signature card that has not been replaced with a PIN card, will not be prompted for PIN when using the signature card at an overseas terminal that supports PIN entry, and can continue to sign for all transactions.
  • This issue is a symptom of Malaysia being in the early stages of transition from signature to PIN. It is a problem that will go away once Malaysian customers are confident in entering a PIN and will behave the same way overseas as they do at home when shopping with their card. Malaysia will be 100% enforced PIN for card use at POS from 1 July 2017.
  • Despite the above points, the industry takes this issue raised by the writer very seriously, and will increase efforts to reinforce the message to customers who travel overseas with PIN enabled cards.
3. A customer who travels with a new PIN card and has selected his 6-digit PIN, but may still encounter a problem using his card at an overseas terminal if the terminal restricts PIN entry to 4 digits
3.1 The standard for Malaysia is 6-digit PIN, while the standard in some overseas markets is 4-digit PIN. Again we acknowledge the issue which the writer raises and note the following points:

  • POS terminals around the world that accept cards with international brands (e.g. American Express, China UnionPay, MasterCard, Visa, and others) are required to comply with international standards enforced by the international card schemes. One of those standards is the ability to accept PINs up to 6 digits. Terminals should only be approved for deployment by international card schemes if they comply with these requirements.
  • As a result of international card scheme rules, examples of POS terminals that do not support PIN lengths greater than 4 digits, even in markets where the standard for cards is 4 digits, should be limited.
  • However, ensuring compliance with global standards across all markets globally is not without its challenges, and there may be exceptions due to local market requirements or conditions which create customer service issues for visitors from overseas. Over time, as cards with 6-digit PIN become more common, we can expect this particular issue to become increasingly isolated if not disappear altogether.
  • If a Malaysian customer does strike a POS terminal that restricts the entry of a PIN to 4 digits, the customer has two choices. The first is to ask the retailer to bypass the PIN entry and sign. If this is not possible, or the retailer refuses, the customer must opt for a different payment method.
The industry is working cohesively and diligently to ensure a smooth migration from signature to PIN. We would urge members of the public and retailers who want to know more about the initiative to visit PIN & Pay.

For further enquires, members of the public are welcomed to contact us at our ABMConnect hotline by dialing 1-300-88-9980, or through eABMConnect by logging on to our website, www.abm.org.my.
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