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Pick new chip cards lest you’re unable to make ATM withdrawals

By Jackson Okoth | May 27th 2014

By Jackson Okoth

Kenya: Bank customers who will not have collected their new chip ATM cards by May 31 could have their current magnetic stripe versions disabled. 

This is in an attempt to provide the impetus some customers need to collect the more secure Europay MasterCard Visa (EMV) cards.

During a spot check last week at the debit cards section at the City Hall branch of Co-operative Bank, as well Equity and Kenya Commercial Bank head offices, which normally have high numbers of retail customers, Business Beat found just a handful at people being served.

“We are going to disable the old cards and this is what will force those who have not come to collect their cards to come forward,” said Mr James Kamau, an officer at one of the leading retail banks in the city.

But even as the clock ticks towards the deadline, the manual parts of the migration to chip and pin cards are complicating the process.

For instance, some banks are having their staff manually sort out the cards, which has seen some customers with similar names or initials end up with the wrong card.

And if one is issued with the wrong payment card, it is retained at the point where the error was detected, forcing customers to go back to their branch to sort out the problem, a laborious and time consuming undertaking.

Logistical nightmare

Further, customers have to pick the new cards from the branches where their accounts are domiciled, which can be a physical limitation and logistical nightmare for both banks and customers.

Mr Jabu Basapo, Visa’s country manager for Southern and East Africa, earlier said he expects the distribution of EMV cards to take up to three months and will depend on the availability of customers.

Ms Jane Mbogho, 30, is among those yet to pick the more secure cards. She opened her account when she worked in Nairobi’s Upper Hill area, but now works in Kisumu.

“I have heard that I have to pick my new card from the branch where I opened my account, but I’m not sure when I will be in Nairobi next, so I’m forced to wait,” she said.

“Besides, I haven’t seen my bank advertising that the new cards are ready yet, so I’m assuming they are not. They haven’t sent me an email or text either. I don’t want to commit to making the journey to my branch, only to be disappointed,”

Other customers have put off migrating because they have underestimated the importance of the shift.

“I don’t know what it is  — I know my bank migrated a while back and has told its customers to pick the new cards. I think I’m waiting for the last-minute rush, or for a good reason to suffer the inconvenience of going to pick my card,” said Mr Reuben Kariuki, 39. 

“But if it is true that my card will be disabled, then of course I’ll rush to pick it and queue a whole day if I have to. I think it’s just laziness, but as it is right now, I don’t honestly foresee myself going to change my card. After all, it still works.”

The trouble with the magnetic stripe cards, however, is that they are easy to duplicate and can be used to make fraudulent purchases. The EMV cards have better data encryption, making them difficult to copy.

Further, from June 1, banks will bear the cost of any fraudulent purchases made using a customer’s magnetic stripe card, which may force them to take drastic action once the liability shifts.

Mrs Alice Musau, 66, had her savings stolen by fraudsters last year, and is still battling with her bank to get a refund.

“When I saw an advert from the bank asking me to upgrade my ATM card, I did it that day. Last year, I lost about Sh200,000 from my account after someone used a copy of my card to withdraw funds. I never, ever want to go through that again,” she said. 

Phase out

According to the Kenya Bankers Association (KBA), more than 70 per cent of the cards in Kenya had been converted to chip and pin technology, and certified EMV-compliant by Visa or MasterCard. But it is still too soon to know how many of these cards are in customers’ hands.

Central Bank had set March this year as the deadline for EMV migration before it was postponed to May 31. By this date, all banks are expected to phase out the magnetic stripe cards in circulation.

KBA has attributed the non-compliance by some banks to migrate payment cards to the EMV standard to customers failing to return their old cards to get those with the new technology, and the stringent requirements institutions must meet to get certified.

Notwithstanding the challenges, KBA has promised to reinforce its commitment to card security and customer protection.

Over the past couple of years, the banking sector has increasingly fallen victim to cybercrime and payment card fraud. With the introduction of the new system, these incidences are expected to decline, saving the industry billions of shillings in losses and restoring customer confidence.

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