Absa has asked the Banking Council to put pressure on banks that are holding back the roll-out of chip-based bank cards in SA.
Walter Volker, Absa Group Payment Systems GM, says Absa had planned to roll-out a million chip cards last year but plans were held back by the fact that some banks do not yet have the required infrastructure to support the project.
The bank has also had to hold back on plans to issue the cards - called EMV cards because they are based on a standard agreed to by EuroPay, MasterCard and Visa - this year, he says.
The roll-out depends on all the banks having their infrastructure, particularly terminals, in place.
Nedbank`s head of card innovation, Joy Rees, recently told ITWeb: "For us to change to EMV cards, all the banks need to be able to accept them at their point of sale devices. If one of the major banks fails, then no South African bank can issue EMV cards en masse because they won`t work at a significant number of merchants.
"We have started issuing cards internally and we`ll move out as soon as we have finished the testing stage," she adds.
First National Bank says it is taking a practical approach to ensure customers gain tangible benefits through this project. "At the moment EMV cards are not the hottest things. We are planning to migrate onto the EMV system, but we`re not in a hurry. We will, however, distribute them to our customers when they can be beneficial to them. For now they aren`t."
The head of Standard Bank`s card division, Mike Olsen, says: "We are in line with our plan, which means that we have commenced the roll-out of the required merchant terminals to the market. That is going well and we are ready to issue cards as well. We have issued cards to a selection of staff. We are currently finalising our inter-bank testing and are comfortable that we will be ready in all aspects by the end of July."
He says Standard Bank is excited about this initiative and will issue the cards when the other banks are ready as well.
Volker, who also chairs the South African EMV Forum and represents the Central Europe, Middle East and Africa region at the international EMV body, estimates that South African banks are spending R1 billion on migrating to a chip-card infrastructure.
This makes it the biggest project yet undertaken by the local banking industry. Globally, the expenditure on migration is counted in trillions of dollars.
However, Volker says the conversion benefits all players, mainly because of the improved security inherent in the chip card, which requires not only a user signature, but a PIN number, and allows for authentication of both the user and the merchant.
He says banks in SA simply have to move to chip. As countries implement the EMV standard, card criminals will move elsewhere, looking for soft targets.
"At the minimum it is a risk mitigation project, but we believe it is more powerful, offering better services for customers," he adds.
Eddie Grobler, MasterCard Southern Africa senior VP and GM, agrees, saying the US has lagged in moving to the chip system, as it has a good telecommunications infrastructure (chip cards also allow for offline use).
"But fraud is migrating to America, so now the business case is opening in North America for chips," he says.
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