HOME > OUR WORK > CCA Viewpoints

CCA: Banks Should Pay for Upgrading of the Cards with Chip
—— 2016-03-14 ——

Recently, the media reported that card-issuing banks and acquirers will shut down the magnetic strip card payment function of domestic POS channels and only accept the transactions with chip cards before October 31, 2014 as required by parties concerned. From 2015, banks will gradually stop issuing magnetic strip cards and only issue chip cards. At present, some banks charge certain amount of costs from consumers when changing their magnetic strip chards into chip cards, which has aroused heated debates among the public. On this issue, CCA has the following considerations:

1. From the perspective of banks’ security obligation, protecting bank card holders’ fund security and preventing them from unlawful infringements of all kinds come as the statutory obligations of banks. Article 18 of the new Consumer Protection Law provides that consumers have the right to ask business operators to provide commodities and services meeting the requirements for guaranteeing personal and property safety. Article 6 of Law on Commercial Banks stipulates that commercial banks should protect depositors’ legitimate rights and interests from being infringed by any unit and individual. Security risks of magnetic strip cards have been discovered long ago, and changing these cards into chip ones is the measure taken by banks to eliminate security risks, so the costs for banks to fulfill their security obligations should be borne by themselves.

2. From the perspective of the nature of bank cards, both magnetic strip cards and chip cards are operational instruments of banks for financial transactions. The costs for operational instruments should be calculated as part of the operating costs of business operators. Banks invest its clients’ funds in the market and use the earnings to pay the principals and interests to its clients and their operating costs, including the costs for labor, equipment and tools. In this connection, banks should certainly pay the costs for guaranteeing security and technological upgrading on their own. At present, words like “the card ownership belongs to ×× bank” can usually be found on the back of most cards, so the costs for issuing and changing bank cards should be assumed by banks. Banks should not charge consumers extra money under the veil of eliminating insecure products and transfer their operating costs to consumers.

3. From the perspective of the contract signed between banks and their clients, banks require their clients to change their original magnetic strip cards into chip cards that belong to unilateral alteration of contract and should be agreed by consumers. Besides, banks should try to reduce negative effects of this unilateral alteration of contract on consumers. Changing bank cards will cause many inconveniences to consumers, such as costing their time and adjustments due to the change of their card number, so banks should try to change their cards without changing numbers of these cards in line with the principle of the supremacy of consumers.

On top of that, CCA calls on parties concerned to extensively listen to the opinions of consumers and consumer associations while developing policies concerning consumers’ interests. CCA also calls on prudent analysis, gradual promotion, strengthened guidance and proper settlement of potential disputes.

Copyright of 2002-2014 copyright China Consumers Association of Beijing ICP No. 05014033