Markets & Finance

Banks say customers delaying switch to new cards ahead of second deadline

cards

Visa cards with and without a chip. Photo/FILE

Customer apathy is slowing down full migration to the new chip-based ATM cards whose migration deadline elapsed a month ago, bankers have said.

Amongst other factors affecting take-up of the new cards is the fact that the old magnetic strip cards continue to be accepted by the new EMV-compliant ATM machines.

Part of the delay is reportedly aided by the access to accounts through Internet agent and mobile banking, meaning many people hardly make physical visits to their bank branches.

The Kenya Bankers Association (KBA) said shifting liability to the issuing bank at the end of May and a month-long customer awareness campaign could see the rate of issuance increase in the short term.

The liability shift means banks would be liable for money lost in a fraudulent transaction carried out using a non-compliant card.

“The pressure (on banks) is, therefore, to ensure that the cards that are magnetic strip are withdrawn from circulation by issuing the customer with the compliant card. There might be a bit of information that consumer may not be aware of, hence the need for the month long campaign,” said KBA chief executive Habil Olaka.

READ: Customer accounts at risk as banks delay migration

He added that individual banks will carry out campaigns to reach their customers, with the association expecting the card base to be 100 per cent EMV compliant by the end of May. Currently 70 per cent of the cards issued are EMV compliant.

Banks have relied variously on media campaigns, SMS texts to customers and messages displayed on ATM screens to request customers to collect new cards from their branches.

“One of the things we may have to consider, though this has not been agreed yet, is how to disable these old cards from the system,” added Mr Olaka.

With the deadline for migration having elapsed on March 31, KBA says some banks experienced migration challenges due to delays in EMV certification as well as logistical concerns around importing and personalising the new chip cards.

READ: Switch to new ATM cards pushed to May after banks fail to beat deadline

All banks are in the process of issuing the cards, Mr Olaka said, though at different stages as some decided to overhaul their entire card management systems.

Several banks expressed reservations over the card-switch deadline and some have not yet changed the cards. Standard Chartered Bank said it was looking at June as a more realistic deadline for compliance while I&M Bank said it would begin replacing cards in April.

Equity Bank indicated that it had so far replaced three million cards out of an estimated five million by the end of March.

Commercial banks, through the industry lobby, had agreed in April 2013 to fully migrate to the EMV platform in a three-phased approach.

The migration was to start with the replacement of ATMs in September 2013, followed by points of sale (POS) terminals in December 2013 and close with the replacement of cards in March this year.

Kenya had 21,089 POS terminals, 2,487 ATM machines and 11.5 million cards in circulation at the end of last year, according to data from the Central Bank of Kenya.

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