Monetary and Banking Research Institute, affiliated with the Central Bank of Iran, has begun studying ways though which the country could adopt EMV chip card standards, helping the country relink with the global payment networks.
EMV—which stands for Europay, MasterCard, Visa—is the new standard for credit card processing, which covers the processing of credit and debit card payments using a card that contains a microprocessor chip.
Nima Amir-Shekari, the head of E-Banking Department at MBRI, noted that employing global standards is a prerequisite for joining international payment networks.
“The CBI and MBRI’s Bank Card Commission have started holding weekly meetings to review the transition to modern bank cards, since magnetic cards [currently used by Iranians] are not secure and standard,” IBENA quoted Amir-Shekari as saying on Saturday.
Unlike magnetic stripe card transactions, where typically only the card’s track 2 data containing the card number and expiry date is processed, every chip-enabled credit card transaction exchanges dozens of information among the card, the terminal and the acquiring bank or processor’s host.
Amir-Shekari, however, said the transition to EMV standards is costly and time-consuming.
“It would take at least five to six years to implement the standards in Iran,” he said.
Mohsen Qaderi, the CEO of Shaparak payment and settlement network, had said earlier that adopting the EMV standard is one of the prerequisites for introducing chip-enabled credit cards to Iran’s market.
“There is a technical gap between our payment network and international networks,” he said. “We need to first clarify our goals, recognize the measures for achieving our goals and the timeframe needed for the process.”
Iran has a vast payment network, with 300 million active bank cards (mostly debit cards), 4.5 million POS terminals and 38,000 ATMs, which need to be replaced for using EMV standards.
On a different note, Nasser Hakimi, the head of CBI’s Technology Department, had said earlier that “considering the cost for a shift to EMV standard, we should first decide whether such a measure is feasible or not”.
“None of our foreign advisors suggests implementing EMV standards,” he was quoted as saying by Bankdari-Ayandeh (Future Banking) magazine earlier in July.
He believes that Iran could use EMV chip cards alongside the currently-used magnetic debit cards, such that the more advanced platform could be reserved for use by foreign bank cards.
“Banks would be able to issue both types of cards based on their customers’ needs,” he said.
The Central Bank of Iran has announced in the past it was engaged in primary talks with foreign payment networks, including European companies.
According to Hakimi, the CBI has held talks with many operators, excluding US-based companies like MasterCard or Visa.
