South Africa’s credit card system is being upgraded as card issuers shift from the magnetic-strip credit card to the smart cards with embedded microchips. <\/p>\n
South African consumers are demanding and very few are prepared to accept anything less than the best. The country is a world leader in terms of merchant penetration and there are few consumers that are not prepared to accept at least the most popular card brands.<\/p>\n
Standard Bank has become the first major bank to embark on the widespread roll-out of chip-encoded credit cards and expects to have about 500000 in use by the end of June next year.<\/p>\n
By the middle of October this year, 103000 cards had been issued and all the bank’s customers due for card renewals or replacements will now be supplied with chip-encoded credit cards that require a PIN number to be inserted before a transaction can take place.<\/p>\n
The roll-out, which is governed by internationally recognised Europay Mastercard and Visa (EMV) standards, lays the platform for the eventual introduction of multi-application cards.<\/p>\n
The cards have a magnetic strip and a chip, providing an extra layer of security for the bank, cardholders 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.<\/p>\n
“At a functional level there is no difference for cardholders or merchants, except for the fact that PIN numbers must be inserted into card-readers,” said Carolina Reddy, director of card business services at Standard Bank, which has been working on the chip-card project for six years.<\/p>\n
“For consumers, the major benefits are additional security and speedier transactions. For merchants and the bank the major benefits are enhanced security and more control over transactions.”<\/p>\n
Chip-encoded cards have a set of counters alerting the bank to all offline transactions, no matter how low the value. This enables the bank to react to fraudulent transactions that have been processed below a merchant’s floor limit much more swiftly.<\/p>\n
Unlike magnetic cards, chip-encoded cards cannot be cloned, reducing fraudulent transactions. ATMs are being upgraded to read chip-encoded cards.<\/p>\n
The new 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. <\/p>\n
Reddy says that while chip-encoded cards are currently only equipped for single applications, the advent of multi-application cards should not be too far away.<\/p>\n
“In a multi-application scenario, various debit, credit and other cards may be able to be incorporated into one card. <\/p>\n
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,” she said.<\/p>\n
Reddy added that chip-encoded cards carry no more personal information about card-holders than existing magnetic-strip cards, allaying fears in some quarters that chip technology would make unwelcome inroads into individual privacy. <\/p>\n
“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,” she said.<\/p>\n
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