Increasing credit card use opens fraud opportunities
ha noi — Viet Nam expects to attract about 3.5 million foreign visitors this year. This creates an enormous opportunity for the banking sector due to the fact that most visitors will use payment cards through card services in the Vietnamese banking system.
But it also creates an opportunity for bank card fraud, frequently carried out by internationally organised criminal rings, according to Viet Nam National Administration of Tourism.
Viet Nam’s credit card market has an estimated potential of 10 million card users, but bank card services are at present only used by about a million customers, according to Visa International Corporation, one of the world’s largest credit card providers.
The Bank for Foreign Trade of Viet Nam (Vietcombank) general director Vu Viet Ngoan said, “This is a boom time for card services, and the trend will continue for the near future.”
Last year, Vietcombank issued 516,200 credit cards, including 480,000 ATM cards, up 200 per cent from the year 2003. Through late July of this year, Vietcombank has attracted 700,000 users of ATM card with transactions in the trillions of dong.
There are now 30 banks providing magnetic card services in Viet Nam and 1.5 million users of an ATM network of 1,100 machines nationwide, said Phung Khac Ke, deputy head of the State Bank of Viet Nam (SBV).
With such a potential card market, Viet Nam is also tempting prey to domestic and international card crime groups. Viet Nam banks and administrative agencies need to be aware of the types of fraud.
Although the local market remains small compared to others in Asia, many signs indicate that the region’s credit card crime organisations already consider Viet Nam as a destination for counterfeit cards flowing from other countries.
According to Vietcombank statistics, counterfeit cards account for 61.1 per cent of card fraud, stolen cards, 19.1 per cent, cards lost by users, 11.1 per cent and other causes, 8.7 per cent.
To prevent risks in card transactions, Viet Nam banks need to apply more secure smart-card technology instead of magnetic card models, which create opportunities for fraud.
Under international rules effective earlier this year, paying banks that fail to use chip-cards will be responsible for the risks of magnetic card fraud. (Viet Nam’s current regulation is that banks that issue the cards must take responsibility for these risks.)
In the near future, banking systems will modernise with US$112 million in capital, part of which will go to the installation of chip-card technology, said Ta Quang Tien, head of the SBV’s Information and Technology Department .
Vietcombank will become the first bank in the country to install anti-fraud chip-card technology. The bank is preparing to convert magnetic ATM cards to chip-cards by the middle of next year. At this point, other banks are also planning modernisation.
In the meantime, the Government and the SBV need to issue legal regulations on the management of card business operations and impose strict criminal penalties for card fraud in the Criminal Code. — VNS
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