BANKS must implement stricter authentication measures to shield cardholders against fraud, the central bank said as the regulator drafts a new rule governing cybercrimes involving online transactions.
“It was recently approved by the Monetary Board and the circular is being crafted right now. It’s about requiring multi-factor authentication,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor Espenilla Jr. said.
The upcoming BSP rule will require banks to further secure cardholders against cybercrimes such as the “card not present” fraud, hacking of online transactions and identity theft, the central official said.
“The banks need to improve their authentication requirements. It’s basically elevating the standard so that the authentication requirements are harder to fake the identity,” he said.
The new regulation is meant to prepare the banking industry to operate in a deeper digital environment under the National Retail Payment System that expected to transform the electronic system and increase retail transactions by e-payments to 20 percent of total transactions by 2020 from 1 percent, based on a 2013 country diagnostics made by the Better Than Cash Alliance.
According to the alliance, it “is a partnership of governments, companies, and international organizations that accelerates the transition from cash to digital payments in order to reduce poverty and drive inclusive growth.”
“We’re going digital. You have to make the environment also secure. Cybercrime is really an issue so we have to deal with it, we can’t ignore the problem,” he said.
According to IBM, industries are incurring an estimated $3.5 trillion in annual revenue losses a year from fraud and financial crimes, a situation that is having a major negative impact on the global economy.
The cost of cybercrime on the global economy is estimated at $375 billion to $575 billion a year.
The BSP has said it is continuously enhancing its supervisory framework for technology risk management to ensure that public trust and confidence are preserved amid rapidly evolving technological landscape and wider and deeper levels of bank participation in the digital space.