The Ukrainians who are going to visit European Union countries must take care, well in advance, about the “plastic content” of their wallets. From January 1, 2012, on, one can get cash from European automated teller machines (ATMs) by means of a chip card only. ATMs, as well as any pay terminals in stores, hotels, airports, etc., will not accept the magnetic-stripe plastic cards which the vast majority of the Ukrainians have.
European bankers officially came up with this initiative as long as two years ago. In a report on the increasing number of criminal machinations with plastic cards, the European Central Bank suggested that all pay terminals be reequipped for new-generation cards, known as smart cards or chip plastic cards, in 2012. Moreover, Western European states approved new safety regulations for card-assisted operations in the now distant 2005. In particular, at that very time, they brought into force the liability shift regulation under which all the losses that result from fraudulent transactions are to be borne by the party that has not yet switched to chip cards. As a result, owners of many stores and restaurants in Western Europe refused, for fear of swindlers, to service bearers of traditional magnetic-stripe cards, which forced many bankers to invest heavy funds and quickly switch to new chip cards.
Instead, Ukrainian banks have only been watching the new technologies, without too much desire to apply them. National bankers continue to emit magnetic-stripe cards, confining themselves to just a few pilot projects that mostly deal with the issue of combined (stripe and chip) cards which experts believe are prone to the same risks as common magnetic cards. As a result, time was lost irreversibly, for the frauds, now ousted from European countries, will now opt for less technological banking markets. So the Ukrainian market, which has highly vulnerable data transfer networks and a huge number of magnetic-stripe cards (according to the National Bank of Ukraine, there were 29.405 million active pay cards in Ukraine in 2010), may become easy prey.
On the contrary, plastic chip cards provide a higher level of code security, which rules out any possibility of copying the number and, accordingly, lowers the risk of forging. The chip also makes it necessary to key in the PIN-code, whereas, to make payment with a magnetic-stripe card, one only needs to put their signature on the receipt. Besides, the smart card is equipped with another unique system of security: after several attempts of unsanctioned access to the card, its chip automatically burns itself down. “The owner of a pay card wants, first of all, to be protected from conmen, which in fact makes him or her wish to switch to a chip card,” says Tetiana Kovach, chief of Eurogasbank’s pay card department. To acquire a chip card, one does not need to have a special account current. Moreover, an account of this kind is applicable for a card with or without the chip, the Eurogasbank expert adds. Experts warn, however, that if you want to use a chip card only to get cash, you will have to go to Europe, for in Ukraine the owner of a chip card will, in all probability, be denied access to a store pay terminal or an ATM because they just do not have the equipment to deal with smart cards.
Meanwhile, Ukraine is going to receive hundreds of thousands of European tourists in almost a six months’ time. They are all owners of chip cards. So it looks like we should advise the Europeans heading for Euro-2012 in Ukraine to stock up cash, for our shops and ATMs will treat their chip cards as just a piece of plastic rather than a pay instrument. Ukraine is unlikely to reequip thousands of ATMs and terminals with new reading devices, each of which costs an average 2,000 dollars.
