Consumers will be required at the end of this month to do contactless or chip and pin transactions at chip-enabled point-of-sale (POS) terminals as global digital payment technology company Visa Inc has set a new mandate across the region.

CIBC Caribbean Bank Limited sent out a notice to its customers last month noting that if their card number is manually entered into a chip-enabled POS terminal after April 30, that transaction would be declined. This comes as a new Visa mandate has been applied to Latin America and the Caribbean, excluding Brazil, for the processing of debit and credit card transactions. This move will reduce the risk and potential fraud associated with ‘key-entered’ transactions as more banks move to EMV (Europay, Mastercard & Visa)-based cards.

“We have informed our merchants of this change and its impact, and will continue to remind them that payments must be by chip and PIN or contactless — the more secure payment methods, and not the ‘key-entered’ transactions, which is high risk; Remind them we will decline all ‘key-entered’ transactions processed at chip-enabled terminals; Encourage them to upgrade to chip-enabled terminals,” said the CIBC release appended by Jennifer Fuller, director – enterprise payments, cards & merchant services.

EMV cards are ones that contain a metallic chip which stores cardholder information compared to magnetic stripe-only cards. According to Visa’s own data, the introduction of these EMV cards has resulted in a 76 per cent drop in counterfeit fraud between 2015 – 2018 among merchants who adopted to those chip-enabled POS terminals. As a result, the new mandate will cut fall-back transactions which occur with magnetic stripe or during the primary account number (PAN) key entry authorisation process with EMV POS terminals.

For the average consumer, a contactless transaction involves putting your card next to the POS terminal or card terminal which exchanges information in a one-time event between your bank and the merchant’s bank. This transaction is usually completed a couple seconds later without the customer needing to give their card to the merchant and is usually indicated by a sound and confirmation on the POS terminal.

A chip and pin transaction involves the customer putting your card into the POS terminal and entering their pin into the device. Thus, the card is never swiped and is harder to compromise.

The adoption of these EMV cards by different banks across the Caribbean has been quite rapid in recent years as numerous banks have introduced either Visa or Mastercard Inc for their customer’s debit cards alongside their domestic payment processing network.

In Jamaica, Visa is the primary payment processor for EMV debit cards at National Commercial Bank Limited (NCBJ), JMMB Bank (Jamaica) Limited, First Global Bank Limited and FirstCaribbean International Bank (Jamaica) Limited. The Bank of Nova Scotia (Jamaica) Limited (BNSJ) and Sagicor Bank Jamaica Limited use Mastercard for their EMV debit cards. JN Bank Limited is set to introduce a Visa EMV debit card during this quarter to its customers. Multilink, which is run by JETS Limited, is Jamaica’s largest domestic payment processor.

VM Building Society’s (VMBS) recently issued credit cards run, Lasco Financial Services Limited’s Lasco Gold prepaid card, the GKONE debit card and JMMB Money Transfer prepaid card all run on the Visa network. These cards are all EMV enabled.

The continued introduction of EMV-enabled cards has seen NCBJ and BNSJ as the largest POS terminal providers upgrading the devices with their merchants. Thus, it is less likely that consumers will have issues using EMV cards at the 50,085 POS terminals in Jamaica.

On February 13, NCBJ increased its contactless limit via physical cards from J$10,000/US$75 to J$15,000/US$100, following the last increase in May 2022. They also increased the limit for contactless transactions via digital wallets from J$15,000/US$100 to J$22,500/US$150.

Even with the introduction of the EMV cards, there remains some level of security concerns by merchants and consumers in Jamaica to use the technology. Some cashiers have been told that store policies don’t allow them to do contactless transactions even though the POS terminal can process it that way. Other cashiers will remain adamant in seeking to tap the card themselves and won’t allow a transaction to continue unless they tap themselves, which is against the principle of contactless transactions. Some consumers will push to ensure that their card isn’t tapped, and they enter a pin when they could have just tapped their card.

Despite the fraud concerns expressed by some merchants, Visa highlighted that they have invested over US$10 billion over the last five years to reduce fraud and increase network security. These helped Visa block US$30 billion in fraud during the first half of 2023 with events of fraud on their network at historic lows as evidenced by US$0.07 of fraud for every US$100 transacted on their network, despite more than two million daily attempts by fraudsters.

“To bring this strategy to life, Visa is behind the scenes deploying its vast resources and capabilities to secure every payment transaction. This includes over a thousand dedicated specialists protecting Visa’s network from malware, zero-day attacks and insider threats; three Cybersecurity Fusion Centers on three continents delivering 24x7x365 security monitoring and incident response, and several hundred AI models in production,” Visa said in an e-mail to the Jamaica Observer.