CBN orders banks to destroy cards trapped in ATMs

 

 

 

The Central Bank of Nigeria (CBN) has directed banks to render payment cards of other banks trapped in their Automated Teller Machines (ATMs) ineffective by perforation them before returning same to the issuing bank.

The central bank gave the directive in its approved “Guidelines for Card Issuance and Usage in Nigeria,” obtained on its website yesterday.

However, THISDAY learnt that some banks have started enforcing the policy since last quarter.

The CBN explained in the 14-page document that the new guidelines would enable issuing banks, other financial institutions, processors, and cards schemes upgrade and maintain their card operations to ensure optimum security, efficiency, cost effectiveness and customer friendliness.

This, it also noted would serve as a tool for banks and other financial institutions to assess their card issuance portfolio as well as to ensure that consumers that carry Nigerian issued cards operate within acceptable standards.

It added: “Any trapped card in the ATM shall be rendered unusable (by perforation) by the acquirer and returned to the issuer on the next working day.

“Issuers shall implement a risk-based approach to setting volume and transaction limits. The risk attached to a customer will be based on Know Your Customer (KYC) due diligence carried out during the customer on-boarding process.

“Issuers are expected to deploy robust fraud monitoring tools that have the capacity to monitor customer transaction trends, real-time operations and option of blocking suspicious transactions.”

Continuing, the guidelines stipulates that all industry stakeholders that process, transmit and/or store cardholder information should ensure that their terminals, applications and processing infrastructure comply with the minimum requirements and best practices.

In addition, it stated that all terminals, applications and processing infrastructure, should also comply with the standards specified by the various card schemes.

“Only banks licenced by the CBN with clearing capacity shall issue payment cards to consumers and corporations in Nigeria. Banks without clearing capacity can issue in conjunction with those with clearing capacity.

“However, where a partnership exists, the parties shall document service level agreements, delineating their responsibilities for the issuance of the cards. A copy of the Service Level Agreement shall be submitted to the Central Bank of Nigeria.

“All banks shall seek approval from the CBN for each card brand and type they wish to issue.  The payment cards to be issued can be a “pay now”, such as debit and prepaid, or a “pay later”, such as credit and charge card. These can be operated in different forms, including, but not limited to: plastic cards; virtual card numbers (VCN), tag, etc,” it stated.

However, it pointed out that the usage channels, limits, frequencies and other control measures would be defined by the issuing banks, adding that the cardholder should in agreement with the issuing bank, have the flexibility to customise the usage limits, select transaction channels and other customisable features on the card, to suit their personal risk preferences.

“All payment card transactions shall be subject to current Nigerian Financial Intelligence Unit (NFIU) reporting requirements. Cards may be issued in Nigerian Naira or in any other convertible currency.

“The international usage limits and frequencies for naira denominated cards shall be defined by each participating bank. All card issuers shall render monthly returns to the CBN on the volume of transactions and gross amount of transactions done internationally using their cards.

“To reduce the burden of card costs to customers, payment cards must be valid (i.e. shall not expire) for at least three years from when the card is issued to the customer,” it added.

Furthermore, the central bank warned that no card issuer or its agent should deliver any card to a customer in a fully-activated state, adding that as card issuer must keep internal records over a sufficient period of time, in line with its existing guidelines, to enable easy tracking of card-related transactions.