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Equity Bank wins big as court dismisses case against thin Sim

By Kamau Muthoni | May 30th 2015

Equity Bank’s subsidiary, Finserve Africa, can now roll out the thin Sim in the mobile money market, after the High Court cleared the cloud on its security.

High Court Judge Isaac Lenaola yesterday declared that the petition filed to stop the thin Sim roll out did not have grounds to warrant the court to bar the bank from competing in the lucrative money market.

The judge ruled that security worries expressed in the case had already been addressed by the Communication Authority of Kenya (CA) and there was a chance to rectify any breaches during the one-year trial given by the international mobile Sims regulator, Groupe Speciale Mobile Association (GSM). “It therefore follows that from the findings of all the technical bodies, the thin Sim technology is relatively safe in banking as proposed and any risks would be dealt with by the relevant bodies,” Justice Lenaola said.

Finserve Africa had been put on trial with the petitioner in the case, lawyer Bernard Murage claiming that his account’s security was at risk as there was no law in place for compensation in case of losses. “I am convinced to find that the alleged innovation will enhance competition in the provision of services and will be beneficial to those who subscribe to it. I therefore do not see why this court should intervene and block the roll out of the technology, the subject of this petition,” said Justice Lenaola.

The judge said he would not stop the process until Data Protection Bill is enacted into law as the court did not have powers to interfere with the legislative process. “The issue whether a data protection law is necessary as a safeguard to the use of the thin SIM is not one such case. This Court cannot order Parliament to make specific laws but only test both the process leading to those laws and their contents against the constitutional muster. What has been placed before this Court is a bill and in that case it is not clear what the end result of that bill would be. I will therefore exercise judicial restraint and avoid making any orders in that regard,” the judge ruled.

Safaricom was the first to cry foul about the technology. The telco wrote to the regulators stating that the overlay SIM card technology had the ability to quietly steal data from the main SIM, including the secret personal identification numbers and pass them to a third party.

In the petition, the lawyer had argued there was a high probability that account holders would get into untold losses if their monies went missing due to the technology, since the country does not have data protection policy.

Possible losses

Mr Murage argued that the guidelines provided by the Cabinet to mitigate any possible losses were not adhered to when CA allowed Equity Bank to enter the mobile money services market using the thin Sim technology. CA and the Central Bank had in August last year okayed Equity Bank’s roll out of the service, after dismissing Safaricom’s objections.

“I recall I was also urged by the petitioner to consider the concerns of Safaricom Ltd regarding the technology. My answer to that submission is simple; I do not have those concerns on record and even if I had, Safaricom is not a party to this petition and it would be against the law for it to agitate its case through third parties or agents without saying so,” he ruled.

The Sim cards are film-thin, embedded with a chip that can be layered over the active side of another operator’s Sim to act as a bridge between the phone and the primary card. The mobile money market currently serves more 25 million people in Kenya and in the Diaspora with the monthly transactions valued at about Sh200 billion.

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