Standard Bank has become the first major bank in South Africa to embark on the widespread roll-out of security-enhanced, chip-encoded credit cards to its customers and expects to have about 500000 cards in use by the end of June next year.
By the middle of October, 103000 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 roll-out of chip-encoded cards, which are governed by internationally recognised Europay Mastercard and Visa standards, lays the platform for the eventual introduction of multi-application cards.
The new cards have a magnetic strip 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," said Doug Walker, director of the 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," he said.
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 swiftly react to fraudulent transactions that have been processed.
Unlike cards that only have a magnetic strip, chip-encoded cards cannot be cloned, sharply reducing the ability of criminals to copy cards and transact fraudulently on them.
Standard Bank is also upgrading software at its ATMs to enable them to read the cards. - I-Net Bridge