Infosecurity

Indonesia pushes for smart cards to curb fraud

By Alice Kok | 22 April 2009

A head of an Indonesian bank has urged the country’s financial services industry to migrate from magnetic strips to smart cards by the end of the year in a bid to combat credit card fraud.

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Aribowo, Head of Payment System Policy and Development Bureau of Bank Indonesia told delegates at Cards & Payments Asia conference on Monday (20 April 2009) that the reason for this push to smart cards lies in its “greater security” as Indonesia attempts to move towards a “less cash society”.

Indonesia has seen an average increase of 34 per cent credit card applications per year, up from 30.9 million in 2006 to 252.2 million in 2008. In 2005, credit card fraud cost Indonesian banks US$33 million - and “vulnerabilities in the magnetic strip” were partly to blame.

In response to a question from Asian Security Review, Aribowo said that this decision to move to smart cards instead of magnetic strips was a result of discussions with various experts. Aribowo told ASR: “Malaysia suggested that we move from a magnetic strip to chip technology. And according to all the industry experts we have spoken to, including Visa and Mastercard, smart chips are more secure.”