The new debit card is specifically designed to provide a straightforward, low-cost banking product with easy access to the mass market. The EMV chip technology behind the enhanced Maestro debit card means that participating retailers no longer need to depend on an expensive ‘always online’ telecom infrastructure in order to securely accept debit cards. EMV is the global standard that ensures that smart cards issued in one country can be readily accepted by chip terminals worldwide. PIN based debit cards currently issued in South Africa come standard with a magnetic stripe. In order to accept payment with magnetic stripe cards, retailers have to be online constantly to ensure that transactions are authorised by the banks. As well as being expensive, this requires a reliable telecommunications infrastructure, which is unavailable in many emerging regions worldwide, such as some rural parts of South Africa. MasterCards response to this challenge is the M/Chip Pre-authorised debit solution that Capitec Bank is piloting. The solution exploits the investment that South African banks are making in EMV acceptance infrastructure, enabling Capitec Bank’s new cards to work in any chip-enabled terminal displaying the Maestro acceptance mark. Capitec Bank customers will be issued a Maestro card, which in addition to having a magnetic stripe, comes with a PIN-protected microchip. Cardholders load this chip with a pre-authorised amount of funds from their bank account. Any retail purchases made using these funds do not need to be authorised by the banks at the time of purchase. The chip also calculates the total amount being spent, and when the pre-authorised amount has been reached, the cardholder simply needs to reload at any Capitec Bank point of sale machine or branch. Cardholders benefit by not having to carry large amounts of cash to buy goods and services. Participating retailers benefit because they are guaranteed payment for all transactions completed with the Maestro card, without having to constantly go online for authorisation. Also, the amount of cash retailers need on their premises can be greatly reduced. Once a day, the retailer can dial up to transfer the transactions, thus saving money and time. A significant challenge for many South African banks has been to convert the estimated two out of three South African consumers who are currently unbanked, into banked customers and payment cardholders. Access to all banking facilities and services is gained through a single product, Capitecs Global One Facility, for which the pre-authorised Maestro card is issued. The banking fees are designed to be the most affordable in South Africa, with loading funds onto the chip and account enquiries being free of charge. Any purchases made at participating retailers have a minimal fixed fee per transaction. The main goal of the pilot, according to Stassen, is to understand customer acceptance, rather than a trial of the technology itself. The card has already completed rigorous controlled testing at Capitec Bank’s headquarters in Stellenbosh. Stassen believes it to be key that the card is an uncomplicated product, for the bank, retailers, and most importantly, for cardholders.
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