NAIROBI – I&M Bank has discontinued debit and credit card-backed e-commerce transactions, citing a massive increase in online fraud.
The bank said in a notice to its customers that it was stopping use of debit and credit cards for online transactions “to safeguard its customers’ funds.”
“We have of late noted an increase in e-commerce or online transaction frauds perpetrated through card payments,” I&M said.
Kenyan banks last year migrated their customers from the magnetic strip to the more secure chip –and-pin technology cards, increasing the security for ATM and Point of sale transactions, but it is now emerging that most of the fraudsters moved online where fraud has been on the rise.
“Since introduction of chip -and- pin cards, ATM and skimming fraud has gone down but fraudsters have now moved online,” said Suprio Sengupta, general manager marketing and product development at I&M.
The bank further instructed its customers who wish to buy things online to issue a prior notice asking for an opening of the card for use and to notify the bank as soon as a transaction has been concluded so that the function can be disabled.
“Please note that should you fail to do so, your card will remain open for ecommerce transactions and if a fraud is perpetrated on the same, the liability for the loss will solely rest on the card holder,” the notice said.
Debit cards and credit cards issued by banks have become increasingly popular means of transactions in the past five years as Kenya moves towards a cashless system.
In June, data from the Central Bank of Kenya showed that debit cards transactions were worth Sh110 billion while credit cards transactions were worth Sh1.17 billion.
This increased from Sh95.85 billion and Sh919 million from a similar period in 2014 for debit and credit card transactions respectively.
Even as the adoption of the cards rises globally, it has been noted that users do not take the necessary precautions to safeguard their online transactions.