New technology to deter ATM fraudsters
By Jackson Okoth
It will take a while longer before bank customers stop losing cash through unauthorized transactions made on automated teller machines (ATMs).
This is because of the slow pace that banks are taking to migrate from the old ATM cards to ones using high-security chip and PIN technology.
In order to issue chip cards, banks are required to independently source them from suppliers or service providers and upgrade their card Management systems to be EMV compliant. The same goes for EMV/chip acceptance. Banks should ensure that their devices, point of sale terminals and automated teller machines are EMV compliant. This is an investment that many commercial banks are dealing with at the present.
EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of chip cards, point of sale terminals and ATMs, for authenticating credit and debit card transactions.
It is a joint effort between Europay, MasterCard and Visa to ensure security and global interoperability so that Visa and MasterCard cards can continue to be accepted everywhere.
“Although there is no market-specific hard deadline for EMV compliance but financial institutions globally- including Kenyan banks- have until 2015 to migrate from the current magnetic chip to the new technology,” said Jabu Basopo, Visa Country Manager for Southern and East Africa.
“EMV Chip cards are embedded with a multifunctional microchip which has superior security features unavailable on the magnetic stripe. Chip technology, both embedded in the card and the acceptance device increases the safety and security of the transaction,” said Basopo.
At present, Kenya plastic money stakeholders among them VISA have joined hands to motivate banks to migrate from old ATM cards to high-security chip and pin card technology. These security features include strong authentication levels which use cryptograms in order to validate the cardholder, the card and the transaction. This makes chip cards the most secure instrument for card payments. The microchip is virtually impossible to ‘crack’ or replicate hence it is a deterrent to fraudsters.
Markets within the Asia Pacific have adopted EMV technology and have seen a drastic decline in both counterfeit fraud and cross order fraud.
“Fraudsters often take advantage of markets where there is low EMV acceptance and commit widespread cross-border fraud – that is using foreign-issued EMV cards on domestic non-EMV terminals,” said Basopo.
Within Africa, there are countries such as Nigeria which aggressively adopted EMV technology and reaped the immediate benefits of enhanced security through a reduction of their fraud by over 90 per cent within one year.
EMV technology was mandated in Central Europe, Middle East and Africa in the 1990s but Visa later introduced the liability shift to allow banks to make their decision to invest based on their experiences, priorities and budget concerns.
Already, Visa is closely working with all stakeholders to get the market ready for chip issuance and acceptance. It has an approved vendor list of accredited service providers which the banks can choose from to manage their compliance programs.
BENEFITS OF MIGRATION TO CHIP TECHNOLOGY
TThis additional investment in security is an opportunity for banks to enhance business opportunities through additional channels, grow cross border transactions through renewed confidence in the payment system and reduce fraud losses due to counterfeit fraud.
Visa is committed to making the payment system as secure as possible through continuous enhancement and improvement of technology including a suite of risk management tools that are available to its clients.
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