Posted by By SEUN ADESIDA on
The Central Bank of Nigeria (CBN) has ordered the 24 banks in the country to move from the magnetic stripe protected Automated Teller Machine (ATM) cards currently being used to a more advanced electronic chip protected ATM cards by December.
The Central Bank of Nigeria (CBN) has ordered the 24 banks in the country to move from the magnetic stripe protected Automated Teller Machine (ATM) cards currently being used to a more advanced electronic chip protected ATM cards by December.
A source at the CBN revealed that banks have been asked to stop further issuance and deployment of the current magnetic stripe protected ATM cards, which is susceptible to cloning by criminally minded persons.
To give the banks adequate time to effect the change, Daily Sun gathered that a December 31, 2008 deadline has been issued to phase out the cards.
According to the source, the magnetic stripe protected ATM cards are being withdrawn from circulation worldwide and the CBN wants the nation to join the rest of the world in using the new cards.
In a chat recently, Skye Bankís Head of Card Unit, Mr. Chuma Inzerum, revealed that the micro chip based ATM card is a more intelligent device, which is better than the present magnetic stripe ATM cards.
According to him, the mag stripe can be copied or cloned and someone with access to your Personal Identification Number (PIN) can use your card. But with the chip, it is very difficult for anybody to copy.
This, according to him, is because the card owner is personal and financial data is programmed into the chip.
Though you will still be using the PIN, the advantage is that it cannot be copied easily like the mag stripe card he said.
An e-payment expert, who spoke on condition of anonymity, said the situation is particularly worrisome because Nigerian banks are adopting the magnetic stripe cards at a time issuers and merchants across the world are changing to the more secure chip cards in order to alleviate credit and debit card fraud that cost billions of dollars every year.
According to him, countries, like the United States of America, the United Kingdom, Japan, Malaysia, Singapore and South Africa have seen losses from counterfeit credit cards skyrocket in recent years, because the magnetic stripe cards are fraud-prone.
He lamented that Nigeria does not need to acquire the legacy products but should rather leapfrog to the best available technology in the market. He said he was particularly sad that Nigerian banks are adopting the wrong technology at a time when major markets in Europe, America and Asia are concluding arrangements to convert their ATM to the more secure chip-based cards.
He predicted that international criminals specializing in credit card fraud might soon turn their attention to the Nigerian banking system and feast on the fraud-prone situation.
Criminals specializing in credit card fraud look for nothing else than the easier way to do it. They migrate from one country to another. Between 2001 and 2003, they were able to ravage the Malaysian, Singaporean, South African and Australian banking systems, he said.
The electronic payment expert noted that the banks that have adopted the magnetic stripes would soon be faced with the reality of converting to the more secure chip cards and they will pay more money for the conversion.
He said that it will cost the United States a whopping $23 billion to convert all their magnetic stripe cards to chip cards.
He, however, blamed the e-payment regulatory body, the Central Bank of Nigeria, for allowing the banks to implement the magnetic stripes e-payment solution in the country.