NAIROBI, Kenya, Dec 6 – Commercial banks are being urged to adopt credit cards that are embedded with a chip technology in a bid to curb the growing cases of fraud involving plastic money.
Visa International Country Manager for Sub Saharan Africa Victor Ndlovu argues that the changeover from magnetic strip technology to the smart chip would help to better protect customers against rising rates of card skimming and counterfeiting.
“Even if you skim a chip card that data is not useful at all,” he explained its features adding that this technology has a microchip that stores information in an encrypted format.
This is unlike the magnetic stripe technology which has been in existence for the last four decades and which has become vulnerable to theft and counterfeiting.
Cases of credit card fraud have been on an upward trend, a situation that some experts have also attributed to the significant increase in the use of plastic money and the growing popularity of online shopping.
With a card reader, fraudsters simply swipe the card and get the magnetic data on it after which they will duplicate or print another card which they will use in their transactions.
Although these cases continue to rise, Ndlovu acknowledges that this trend is not about to be reversed owing to the fact that fraudsters are becoming more sophisticated.
In addition, the transition to the newer technology is both time consuming and a capital intensive exercise and therefore many banks are likely to continue issuing the ‘outdated’ cards.
Out of the 24 Visa member banks in Kenya for example, only two of them have adopted the chip technology pointing to its slow uptake not only in the country but also around the world.
The problem is exacerbated by the fact that many firms in East Africa that accept the use of plastic money at their outlets have not met the minimum set standards for network and application controls as documented in a recent survey by consulting firm Deloitte East Africa.
Given all these factors, the manager emphasises that the responsibility to stem credit card fraud should not be left to the banks alone but cardholders must also be proactive in protecting themselves.
He recommends getting back to basics such that people for instance cover the keypad when entering their Personal Identification Numbers at Automated Teller Machines while also being alert to their surroundings before conducting their transactions.
“Customers need to be very sensitive when they are transacting; they need to look at the card when it is being swipe to ensure that it is not being swiped at a terminal that they cannot see and always monitor your transactions. Always keep an eye on your bank account that way, you will always be on top of your game,” he advises.
Despite these concerns, Ndlovu is confident that credit card usage will continue to rise as people choose convenience that comes with carrying electronic cards.
This is vindicated by the steady growth in Visa cardholders at an average of 20 to 30 percent per year as well as the continued rise in the amount spent.
However, he is cognisant of the fact that they will need to demonstrate to banks and other customers that they are doing everything possible to safeguard their interests.