Magnetic strip cards are relatively easy to skim and counterfeit, so for the sake of security, a conscious decision was made to limit their functionality.They are thus not an effective payment instrument for emerging services. On 5 February 2001, the Bankers Association of the ROC (BAROC) established the Task Force for Conversion from Magnetic Strip Cards to Chip Cards. This task force evaluated plans to convert to financial chip cards, and developed recommendations for interbank chip-card standards for the competent authorities and financial institutions.
Then, on 26 December 2001, BAROC established the Task Force on the Development of Financial Chip Cards to address follow-up issues. On 15 September 2003, financial institutions began bringing chip cards online, and by 2 October 2003, 13 financial institutions had formally initiated secure and convenient financial chip card operations.
1. Applications
Because chip cards are a kind of transaction identification certificate provided to cardholders by an issuing bank, they serve only to confirm the cardholder’s identity and authenticate the transaction data; the cards themselves have no built-in transaction or service capabilities. It is up to system participants (issuing, acquiring, and switching organizations) to decide what kinds of transactions the cards can be used for. This provides for a more flexible platform.
Card services have developed in parallel with financial market applications, making it harder and harder to distinguish between credit cards, debit cards, and financial cards. Financial cards function as credit cards and stored-value cards, while financial cards can be used to withdraw cash, transfer funds between accounts, and make account inquiries. A card’s functionality is determined by the ways in which a cardholder uses it.
2. Chip card applications
(1) Original functions—withdrawing cash, transferring funds between accounts,
paying taxes and bills, making account inquiries.
(2) New functions—paying bills, making purchase payments, refunds,
pre-authorizations, and authorizations.
(3) Possible additional functions—Banks have the option of issuing combo
cards, which function as both a FISC chip card and a credit card at the
same time. (With combo cards, both topping up and purchases can be
done either online or offline), and such cards can be programmed to
support one-time passwords and the Bankers Association's FXML
certificate.
3. Real-world applications
(1) Internet ATM—financial chip cards can use virtual access points to make
transfers between accounts, make purchase payments, and pay taxes and
bills.
(2) Paying medical bills—financial chip cards can be run through a POS
terminal to make transfers between accounts to pay for hospital stays and
medical treatment.
(3) Chunghwa Telecom’s Multimedia-on-Demand (MOD) applications—
financial chip cards can be used with the MOD service to make transfers
between accounts and purchase payments.
(4 )Stored-value applications—the stored-value function of financial chip cards
can be used to make micropayments to merchants.
(5) Mobile phone JAVA SIM applications—financial chip cards can be used in
mobile phones to enable mobile payments.(back)
1. Features
Regardless of the access point via which cardholders puts their financial chip cards to use (ATM, Web ATM, kiosk, or MOD), they need only key in their password and confirm the transaction data to complete a transaction.
2. Benefits
Benefits to financial institutions: Card services that support the FISC chip card specifications can utilize the chip card interbank platform, built by the FISC and participating financial institutions, for financial transactions and clearing operations.
By making use of this service, financial institutions can build a transparent, diversified payment environment, simplifying the deployment of terminal equipment and increasing the number and variety of purchase channels.
Financial institutions can meet the need of enterprises for electronic funds handling, and, by establishing inter-industry alliances, create a win-win environment, lower the costs of each platform’s construction, and help businesses realize their shared objectives.
Benefits to customers: Financial chip cards put everything on one card. Cash withdrawals, transfers between accounts, and purchase payments can all be utilized via a variety of access points, improving security and reducing the number of cards customers must carry on their person.(back)
1. Cardholders carry out transactions simply by inserting their card into one of
a variety of terminals and entering a password.
2. The terminal (for example, an ATM) transmits the transaction data to the
chip card and receives a transaction authentication code (TAC) or a digital
signature, which it sends to an acquirer, which transmits it to FISC, which
then sends it to the card issuer.
3. The card issuer authenticates the card and the TAC, and sends that
authentication back to the terminal over the interbank network. The
transaction is then completed.
1. Interbank balance inquiries
Cardholders can use CD/ATM machines bearing the
logo to check the balance in their chip-card accounts.
2. Interbank withdrawals
Cardholders can use their chip cards in CD/ATM machines bearing the logo to withdraw cash from their accounts. (Withdrawals are in increments of NT$100. Interbank withdrawals are limited to a maximum of NT$20,000.)
3. Interbank transfers
Cardholders can use their chip cards at CD/ATM machines bearing the logo to transfer funds from their account to another account (belonging to another person). (Transfers are in increments of NT$1. Interbank transfers are limited to a maximum of NT$2 million per transaction. Financial institutions may also set their own limits on the amount of each transfer. A maximum of NT$3 million may be transferred per day.) On 1 June 2005, the limit on transfers to non-designated accounts was lowered to NT$30,000 per day.
Note: CD/ATM machines can only transfer money out of a cardholder’s account (reducing its balance), not into it (increasing its balance). Cardholders are therefore advised to be careful when making transfers.
4. Interbank tax and bill payments
Cardholders can use their chip cards at CD/ATM machines bearing the logo and marked as tax/bill payment machines to pay current taxes or designated bills and bills with funds from their accounts. (Transactions are in increments of NT$1. The transaction limit is NT$2 million. Payments are limited to a maximum of NT$3 million per day.)
5. Interbank payment transfers
Cardholders can use their chip cards at POS terminals or financial services terminals bearing the
logo to pay designated bills (such as credit card bills) or make purchase payments using money in their accounts.
Interbank purchase payments
Cardholders can buy goods or services at POS terminals or financial services terminals bearing the logo by using their chip cards to debit their deposit account or their credit card.
6. Chargebacks
Holders of chip cards who need to charge back a purchase (if there is a mistake in the original transaction data or the customer returns the purchased item), may, with the approval of the acquirer or the merchant from whom the purchase was made, use the merchant’s POS terminal to charge back the transaction within one day (24 hours) of the original purchase.
7. Refunds
Holders of chip cards who need to return a purchase, can receive a partial or complete refund provided that the participating merchant agrees to it.
8. Pre-authorizations
Holders of chip cards with credit card functions can use a POS terminal, an automated payment device, or a financial services terminal to request an advance authorization from their card issuer for the amount of a credit purchase.
9. Pre-authorization completions
Holders of chip cards with credit card functions who receive an authorization from their card issuer must complete the transaction within 20 minutes of the authorization’s issuance.(back)