Two-step card payments pile pressure on vendors
An agent swipes an ATM card as a customer pay for some services.
What you need to know:
- Some businesses were not following the two-step verification process required for card transactions.
- Card usage continues to face risk threats of fraud through criminal activities like social engineering and identity theft.
Businesses with simple card-based purchase transactions face pressure to upgrade their systems as bankers pushed through a requirement for additional verification and contactless technology to reduce fraud, especially in online trade.
The push by the lenders’ lobby Kenya Bankers Association(KBA) comes amid complaints that some businesses were not following the two-step verification process required for card transactions.
Users have complained that in some instances, payments are directly processed using their stored credit card information in a simple process that bypasses any monetary exchange between them and vendors—creating a window for fraud and unauthorised transactions.
Bankers are now seeking to increase the implementation of a two-step verification process and contactless technology to reduce fraud.
The security strategy will see banks send a one-time personal identification number (PIN) to users and shoppers when transacting online.
Some banks are already using multi-factor authentication to confirm the users.
E-commerce has gained pace in the country accelerated by the pandemic, with 60 per cent of consumers estimated to engage in a digital environment to transact business hence fuelling card frauds.
‘’Some banks have put multiple-factor authentication where sale and transaction are not confirmed on the internet alone. The banks will send a second one-time authentication password to the message or emails,’’ said Fidelis Muia, technical services director at KBA.
“We will see a reduction in frauds if all banks implement the feature.”
Card usage continues to face risk threats of fraud through criminal activities like social engineering and identity theft; poor network of point of sale(POS) terminals, cost of POS terminals, and acceptance by merchants.
Data from the Central Bank of Kenya’s national payments strategy show volume of card transactions at a point of sale (POS) increased to 42 million in 2021 from 5.5 million in 2010. The value increased to Sh194 billion from Sh44 billion over the same period.
There were 49,375 POS machines as at February, up from 47,762 in a similar period in 2021. The value transacted through POS in February was Sh16.36 billion lower than Sh568.71 billion handled by mobile money agents.
This has reduced its acceptance among customers as compared to mobile money transactions, substituting card payments.
