Standard Bank has become the first major bank in South Africa to embark on the widespread rollout of security-enhanced, chip-encoded credit cards to its customers and expects to have around 500 000 cards in use by the end of June next year.
By the middle of October, 103 000 cards had been issued, and all customers receiving card renewals or replacements for lost or stolen cards will now be supplied with chip-encoded credit cards that require a PIN number to be inserted before a transaction can take place.
Significantly, the bank’s rollout of chip-encoded cards, which are governed by internationally recognised Europay Mastercard and Visa (EMV) standards, lays the platform for the eventual introduction of multi-application cards at some time in the future.
The new cards have a magnetic stripe and a chip, providing an extra layer of security for the bank, card holders and merchants. In many cases cardholders will be required to insert a PIN number or provide a signature before a transaction can be successfully processed.
“At a functional level there is no difference for card holders or merchants except for the fact that PIN numbers must be inserted into card-readers,” says Doug Walker, director: Card Division at Standard Bank, which has been working on a chip card technology project for the past six years.
“For customers, the major benefits are additional security and speedier transaction times. For merchants and the bank the major benefits are enhanced security and more control over transactions.”
Chips inserted in the cards have a set of counters alerting the bank to how many transactions have been done offline, no matter how low the value. This enables the bank to much more swiftly react to fraudulent transactions that have been processed below a merchant’s floor limit.
Unlike cards that only have a magnetic stripe, chip-encoded cards cannot be cloned, sharply reducing the ability of criminals to copy cards and transact fraudulently on them. Standard Bank is also in the process of a software upgrade at its ATMs to enable them to read chip-encoded cards.
From a technology point of view, Standard Bank’s chip-encoded cards meet strict security, certification and compliance standards mapped out by EMV and implemented and adhered to by card issuers in Europe and other parts of the world.
Looking ahead, Walker says while chip-encoded cards are currently only equipped for single applications, the advent of multi-application cards should not be too far away.
“In a multi-application scenario, various debit, credit and other cards may be able to be incorporated into one card. This will reduce the number of cards people carry in their wallets or purses and also expand the opportunities for a wide range of e-commerce transactions to be conducted from a single card,” he says.
Importantly, Walker stresses that chip-encoded cards carry no more personal information about card-holders on them than existing magnetic stripe cards, allaying fears in some quarters that chip technology will make unwelcome inroads into individual privacy.
“The overall intention of the launch of chip-encoded cards is to increase and improve security and not to change or interfere with the way people carry out their purchases or other card-based transactions,” he says.