Chip and PIN card users on the rise, retailers ready

So far, South African banks have issued over one million MasterCard Chip and PIN cards, the credit card provider announced Wednesday, 18 March 2009, at a media briefing held in Sandton, Johannesburg.

Chip and PIN cards are based on EMV (Europay, MasterCard, Visa) standards, the industry standard that ensures global interoperability for Chip card transactions. Instead of being swiped to communicate its payment information, the Chip and PIN card is ‘dipped' into the terminal and remains there throughout the transaction.

The chip stores the issuing bank's authorisation rules electronically. If applicable, the card can also check the cardholder's pin as an alternative means of authentication. The result of these features is added security, and a more streamlined payment transaction.

“With the phasing-in of Chip and PIN all over the world, MasterCard has developed extensive expertise in helping retailers get their acceptance programmes up and running,” said Dougie Henderson, vice president, product sales, South Africa, MasterCard Worldwide.

“Through the support of our customer banks in South Africa, we have been working with our market's retailers to make this transition as seamless as possible,” he said.

According to Henderson, Chip and PIN cards provide a safer and more secure method of paying for goods or services. They are more difficult to counterfeit than magnetic stripe cards, making them a powerful fraud deterrent. EMVco, the company that manages the Chip and PIN specifications, estimates that there are now over 730 million Chip cards in use globally.

Major retailers in South Africa are re-engineering their systems to accept these cards.

The new Chip cards will not completely replace magnetic stripe cards overnight; both types of cards will have to be accepted for the foreseeable future. Chip terminals are designed to accommodate both, so there is no need for retailers to maintain two separate terminals.

“The long-term global objective is for all countries to use Chip and PIN as the common method of cardholder identification and payment. South Africa is well on its way to becoming part of this global movement,” added says Walter Volker, managing director of the Payments Association of South Africa.