Banks in Nigeria have spent some N400 million to upgrade their front end processors to EMV standard in full compliance to Central Bank of Nigeria’s (CBN) directive to all commercial banks in the country to discontinue the issuance of magnetic stripe cards by December, Nigeria CommunicationsWeek can reveal.
Front end processor is the software that drives the Automated Teller Machine to carry out transactions; it serves as interface between the banking applications and the applications from the ATM and the card acquirer.
Nigeria CommunicationsWeek investigations revealed that it costs a bank some N20 million to effectively carry out this upgrade, a cost that came at a discount as the vendor of the software is also under the mandate to upgrade its system to Europe MasterCard and Visa standard.
It was gathered that only 20 out of the 24 banks will meet complete compliance to EMV by December.
Against the backdrop of the huge expenditure that some banks have made on the EMV standards, most have decided to charge their subscribers for migration to chip and Pin cards.
It would be recalled that migration directive by Central Bank of Nigeria to banks and switching companies from magnetic stripe cards to chip and Pin EMV standard became necessary in view of activities of fraudsters who have been defrauding customers through the ATM.
Chip and Pin EMV cards offers more security features than magnetic stripe, with smartcard technology, chip and pin credit/debit cards contain an embedded microchip and are authenticated automatically using a PIN.
When a customer wishes to pay for goods using this system, the card is placed into a "PIN pad" terminal (often by the customer themselves) or a modified swipe-card reader, which accesses the chip on the card.
Once the card has been verified as authentic, the customer enters a 4-digit PIN, which is checked against the PIN stored on the card; if the two matches, the transaction is completed.
Although, banks had to carry out minor hardware upgrade but the major spending in the chip and pin upgrade was carried out on the software that makes ATMs and Point of Sale terminal ready chip and pin cards.
