No reports of identity theft with new chip-and-pin cards

There has been no reported incident of card ‘skimming’ in Kenya over the past year following introduction of the chip-and-pin technology last year, Kenya Bankers Association has said.

The technology was introduced to replace the magnetic stripe cards that were prone to skimming—a process which involves stealing of data from the card to defraud bank customers.

“Nearly a year after the adoption of EMV, which introduced chip-and-pin technology as the industry-wide standard for payment cards, no card skimming incidents have been reported to Kenya Bankers Association by its member banks,” said Fidelis Muia, KBA’s director of technical services Tuesday.

There is no data on the number of ATM related fraud cases reported in the country, but banks have previously admitted that it was a challenge.

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Fraudsters, mainly from European nations and West Africa were exploiting the weak security of the magnetic stripe to steal from customers.

Last year, Kenya became the third African nation, after Nigeria and South Africa, to transition from the magnetic stripe placing the country at par with advanced countries.

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Global research has shown fraud tends to fall to negligible levels when 60 to 70 per cent of the industry is using EMV cards. This is because ATM fraud becomes less attractive and fraudsters move out to more vulnerable markets.

KBA said all bank ATMs and point of sale machines are now EMV compliant. As at February there were 2,643 ATMs in the country and 17,345 point of sale terminals. There were 12.2 million debit cards and 200,047 credit cards in circulation as at February. The number of prepaid cards nearly tripled in February to 1,226,603 following attempts to stop use of cash payments in the matatu sector.

Banks are now hoping to ride on the increased safety to increase card usage in the country that has lagged behind mobile money.

Data from Central Bank of Kenya shows the value of transactions conducted through cards dropped by nine per cent in the first two months of the year to Sh203 billion compared to Sh223 billion in January and February last year.

Kenya has become a global leader in mobile banking with payments accepted in retail outlets, partly contributing to the slow uptake of card usage in the country. 

With Kenya estimated to settle 96 per cent of its transactions in cash, bankers are hopeful to turn the tide and up card usage especially in retail outlets.

Previous research by MasterCard Advisors cited security and transactional costs as main factors contributing to low usage of cards.