East African banks lose US$48 million to fraud

Nairobi cityOver the festive period banks have sent messages to customers urging them to change their personal identification numbers to prevent skimming. (Image source: kidcreole80) East African banks have lost US$48mn to fraud in an 18-month period that ended June 2012, according to a Deloitte report

The accounting giant also noted that very few Kenyan financial service firms adhere to the Payment Card Industry Data Security Standards (PCI DSS) that have been created to secure and protect customer payment data.

“It is harder to skim information from a chip card when compared with a magnetic stripe card. However, the technology is up to five times more expensive,” observed Kenya Bankers Association CEO Habil Olaka.

He revealed that the banking sector was planning to launch an industry-wide project to migrate to chip technology cards in the first quarter of 2013.

In late December 2012, some account holders with Kenya’s Standard Chartered Bank lost an undisclosed sum of money from fraudsters on what was said to be card skimming.

“Card skimming is a vice that banks and other issuers have to contend with from time to time. Some of our customers have had this misfortune over the past couple of months and it has become more pronounced during the festive season,” said Standard Chartered East Africa executive director Kariuki Ngari.

With increased numbers of internet users and the installation of fibre optic cables in the East African region, e-payments by banks and other issuers have been on the rise.

Banks are gradually forming partnerships with technology companies to roll out e-payment platforms.

“Internet is growing steadily in Kenya. It could be tapped by tourism, auto, and airlines among other institutions to reach out global clients,” asserted Peter Waa, director of technology firm Paysure Limited. 

Even with the huge investment in online and mobile money transfer services and e-payments technology, experts noted that security remained a key concern.

“Banks and other money-transfer service providers are investing huge sums of money and personnel in countering these crimes but they continue to pose legal and financial challenges to them,” said Sammy Kioki, the African Alliance Manager for Cyber Security Africa.

Mwangi Mumero 

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