Strengthening Security Controls for Automatic Teller Machine Services

The Hong Kong Monetary Authority (HKMA) announced today (Wednesday) that all authorized institutions (AIs) in Hong Kong will implement the chip-based technology for all Automatic Teller Machine (ATM) services in Hong Kong. As compared to the magnetic stripe currently in use, such chip-based technology will make it much more difficult for fraudsters to replicate ATM cards with stolen data for use in Hong Kong. This is part of an ongoing effort to further enhance the security for ATM services offered by AIs in Hong Kong. Following discussions with the HKMA, the banking industry has agreed to start the implementation programme shortly.

The HKMA has set out, in a circular to AIs today, the details of the chip-based ATM security controls to be implemented and the corresponding implementation schedule, including upgrading of the ATM terminals and card replacement. The AIs concerned will upgrade the ATM terminals and carry out the card replacement exercise starting from early 2012. As around 2,900 ATM terminals and around 20 million ATM cards (including debit cards and credit cards) are involved, the implementation will be undertaken in phases. The card replacement process is expected to be completed by March 2014 for debit cards and credit cards linked to cardholders’ bank accounts, and by end of 2015 for the remaining credit cards.

As many overseas ATMs are still using magnetic stripe technology, the new chip card will continue to feature a magnetic stripe to allow overseas use by cardholders. But enhanced security measures will be implemented to offer additional protection against unauthorised overseas ATM transactions. The overseas ATM cash withdrawal capability for chip cards will be pre-set as “deactivated” and such capability needs to be activated by cardholders through appropriate channels before ATM cash withdrawal transactions could be conducted overseas. Cardholders may also choose to restrict the time period and set a lower withdrawal limit for overseas transactions. AIs will launch public education campaigns to promote public awareness of the enhanced measures in advance to ensure that customers have adequate time to understand the new measures.

Executive Director (Banking Supervision) of the HKMA, Nelson Man, said “Chip-based ATM transactions offer greater security as the data stored within the chip is protected by more advanced security controls. Together with the enhanced security measures for overseas ATM transactions, cardholders will be given better protection against fraudulent practices.”

“We believe that the implementation of chip-based ATM technology will further strengthen the security level of ATM services in Hong Kong. As a safeguard, cardholders should continue to take precautionary measures to keep their card safe and protect their Personal Identification Number (PIN) at all times.” Mr Man added.

The HKMA will continue to work with the banking industry to monitor the latest technological developments, and will review from time to time the need to introduce additional security measures where necessary.

Hong Kong Monetary Authority
1 June 2011