EMV, which stands for Europay, Mastercard and Visa, is a global standard for cards equipped with computer chips and its technology is designed to enable secure payment at compatible point of sale (POS) terminals.
According to Mehran Mahramian, CBI’s vice governor for innovative technologies, the new technology can support contactless payment by using near-field communication, or NFC.
"The mechanism is in line with international standards, which is gaining acceptance around the world," he was quoted as saying by IBENA, the news agency affiliated to the Monetary and Research Institute.
As per the mechanism, users only need to add their bank card information to applications on their smartphones, which would enable users to make transactions without any physical contact with POS terminals.
Mahramian noted that the new payment mechanism can easily be used by smartphones equipped with NFC, which he said "is available in more than 80% of smartphones used in Iran".
NFC-equipped cards are tapped against a terminal scanner that can pick up card data from the embedded computer chip.
The top banking official stressed that using the new payment instrument is optional, as it is designed merely to facilitate retail payment "and does not aim to upend the status quo". Therefore, users without smartphones should not be concerned, as POS terminals can process both the previous and the new payment method.
Four Banks Involved
The contactless payment has now been launched by one payment service provider (PSP) company and a bank. Three more banks are scheduled to join the initiative in the near future, according to the official.
"The scheme has become operational as of today [Monday] in a limited manner and people can use POS machines that support the technology," Mahramian said, predicting that the new payment mechanism will gain popularity in the next fiscal year that starts on March 20.
The scheme was unveiled by CBI Governor Abdolnasser Hammati. He said the payment system is developed in accordance with international security standards with the aim of easing payment transactions and helping CBI counter money laundering.
He called on banks and PSPs to compete for offering the newly-developed mechanism in an optimal manner.
Fighting Online Gambling
Speaking on the sidelines of the ceremony, Hemmati said CBI is steadfast in fighting money laundering and gateways processing payments of online gambling.
"In cooperation with the judiciary, more than 2,000 bank cards used in [online] gambling centers were identified," he said.
Press reports say there has been an increase in online gambling and betting. Experts say such cyber and financial crimes are spreading fast and should raise the alarm, particularly in the cyber and payment sectors. Gambling is banned in Iran since 1979.
To cope with such illegal activities, CBI had earlier said that it is using a smart platform to detect and block unauthorized payment gateways used by betting websites.
Regulatory officials say payment gateways used by online casinos are not authorized by the banking and payment networks. It appears that they usually rent gateways, bank accounts and bank cards for such banned activities.