Steward Bank has issued a notice warning its customers about the increased risk of transactions involving credit and debit card cloning (card cloning). The Customer Notice is asking customers to be vigilant when using their cards and it went to great lengths prescribing habits customers can take to guard against card cloning.
The increased use of plastic money in Zimbabwe due to cash shortages has coincided with an increase in card cloning. A report published by the Zimbabwe Republic Police in March disclosed that in the first quarter of 2018, at least $200 000 to the perpetrators of bank card cloning.
It’s no surprise that fraud concerning card cloning is rising in Zimbabwe because all but one bank, CBZ in Zimbabwe use old Magnetic Stripe Cards which are considered to be less secure compared to the relatively new Chip Cards. CBZ not only has ‘the secure’ Chip cards, it goes further in guarding against credit and debit card fraud by offering a service which enables its customers to remotely lock their CBZ credit and debit card ensuring that the cards will not be able to do transactions.
Why Magnetic Stripe Cards not secure compared to Chip Cards
Chip cards offer much better fraud protection than the (now) antiquated magnetic stripe cards simply because magnetic stripe cards use technology that can be easily be breached by fraudsters.
Magnetic-stripe cards are magnetized. When you swipe them, the payment processor reads their magnetic fields and matches them to your bank account information. The problem with this is that the data is static, making it easier for fraudsters to lift your information and clone it onto a new card. In fact, there’s is a device called a skimmer, which they can get or make for as little as $20 that can clone a card pretty easily.
On the other hand, the data on chip cards is constantly changing, making it extremely hard to isolate and extract. To rip it off, someone would have to get into the physical chip circuit and manipulate things to get your bank information. Not only is this level of data manipulation really difficult, but it also requires a set of high-tech equipment that can cost north of $1 million. That’s not the kind of cash your average fraudster has handy.
Why Banks in Zimbabwe continue to use Magnetic Stripe Cards?
The obvious reason is that the Chip cards are still expensive relative to Magnetic Stripe Cards. The cost of adopting Chip Cards is not only limited to ordering the Chip cards but upgrading and replacing the existing debit and credit infrastructure so as to accommodate the new Chip card technology. Whilst it’s pretty expensive to adopt Chip cards, it’s better than to lose customers in the event of customers losing trust to use credit and debit cards due to falling victim card cloning.
Switching to chip cards is more than just saving money it’s about protecting customers. Plus, less fraud means fewer headaches from disputes and better service for customers. Local banks should stop contemplating about the cost of introducing Chip Cards and prioritize their customer’s safety.