MasterCard Chip and PIN a reality with all stakeholders on board

According to MasterCard Worldwide, South African banks have issued in excess of one million MasterCard Chip and PIN cards. As a result, retailers are seeing a rapidly growing number of Chip and PIN cardholders at pay points. Chip and PIN cards are based on EMV 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. In this market, the chip card also checks the cardholder’s PIN as an alternative means of authentication. The result of these features is added security, a more streamlined payment transaction, and better customer service.

The majority of South Africa’s retailers have already upgraded their systems to accept Chip and PIN cards, and are now gearing up to accept the multitude of cards in the market. The industry is now working together at full force to ensure that all stakeholders are comfortable and up to speed with this new transaction process.

“With the phasing-in of chip all over the world, MasterCard has developed extensive expertise in helping retailers get their acceptance programmes up and running,” says 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 continues.

Chip and PIN cards have opened up a world of convenience for banks, retailers and cardholders by providing 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. Chip-based payment systems have in fact been adopted throughout Europe, as well as the Asia/Pacific region and parts of Latin America and the Middle East. 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 such as Shoprite Checkers, Pick ‘n Pay, Mr Price and Exclusive Books are re-engineering their systems to accept Chip and PIN cards. The one million cards already issued is just the tip of the iceberg in terms of issuance, as millions more are still to be issued,” says Ronnie Herzfeld, chairman of the South African Retailers Payment Issues Forum (SARPIF). 

“And with tourism expected to ramp up significantly over the next few years, retailers that have already upgraded their systems are actively training their employees to identify and manage Chip and PIN transactions efficiently,” he says.

“Knowledgeable sales assistants and staff are the best advocates for chip acceptance. They hold the key to smooth, successful transactions – and happy consumers,” adds Henderson.

Once the new payments system is working at full capacity, Chip and PIN cards will start to be seen as more than just a fraud deterrent. “The card’s chip can store a lot more information than a magnetic stripe can,” says Walter Volker, managing director of the Payments Association of South Africa. “This enables the Chip and PIN card to have many applications and can be used for banking/payments, loyalty programmes and promotions, access control, ticket buying, parking and toll payment, and transport payment.”

Because 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, hence there is no need for retailers to maintain two separate terminals.

“Chip and PIN cards will continue to incorporate the conventional magnetic stripe technology as other markets align their payment systems with the Chip and PIN standard,” Volker adds. “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.”

For more information, visit the MasterCard Chip Acceptance Toolkit for Retailers http://www.mastercard.com/za/retailer/en/index.html

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