Standard Bank in EMV push

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 22 May 2007

Standard Bank is powering ahead with its drive to phase out fraud-prone magnetic strip credit cards.

The change will benefit the end-user, the bank and business, by reducing the ongoing credit card fraud epidemic. This should reduce losses incurred by business, restore credibility to the process and bring down bank costs dumped on the consumer, says Standard Bank.

Jork Fischer, Standard Bank SA CIO for personal and business banking, says the bank plans to have changed all magnetic strip cards by the end of 2009. In their place will be chip and PIN cards. The roll-out starts next month.

By the end of June "we will have 20 000 cards in circulation with another 400 000 by the end of the year", says Fischer.

A slight inconvenience to users will be that all credit cards embedded with the technology will require a PIN to transact at a point of sale. Fischer believes the inconvenience will be offset by the greater difficulties the technology will pose to fraudsters and their accomplices.

"These crooks often use magnetic card readers to capture data on the magnetic strips and then clone the card. Now they will also require the PIN, similar to a debit card, for the stolen information to be worth the trouble."

International standard

Fischer says chip and PIN technology, also known as EMV (from Europay, MasterCard and Visa, the three companies that originally co-operated to develop the standard), has been some time in coming.

"Standard Bank, in close co-operation with the South African Reserve Bank and the local banking industry, has, since the late 1990s, been working to introduce EMV cards to the South African market," he says. "EMV is the international standard for using chip technology when doing card purchases." The system has been live for a year as a pilot to staff, Fischer adds.

Doug Walker, director of the card division at Standard Bank, says the customer may select and change the PIN at any Standard Bank ATM or branch. "If the credit card is lost or stolen, it will be difficult for criminals to duplicate the secure chip on the card, thereby reducing the risk of fraud. Cards also present the opportunity for new applications at the point of purchase, as well as multiple accounts on one card, reducing the number of cards held in a wallet or purse."

Walker says the bank has "worked hard to ensure the transition to chip and PIN will be both seamless and convenient".

Standard Bank point of sale devices have been upgraded to accept EMV cards, "and our ATMs are in the process of being converted. While there have been huge investments in chip and PIN, to ensure all supporting infrastructure still operates effectively, we will not pass these costs onto our customers," says Walker.