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2009-07-07:Valucard, Interswitch in Battle for Supremacy

By Babajide Komolafe

The wave of competition caught up with the two card giants in Nigeria last week as they make claims of superiority over each others products, Babajide Komolafe writes

The market was taken by surprise last week when the two card giants, Valucard and Interswitch, traded claims of authenticity of their cards opening in what could be better described as an exercise in perfect de-marketing.

The whole exercise was to enable one of them gain an upper hand in an intense competition for the market for chip and PIN, Europay, MasterCard and Visa (EMV) compliant payment cards in the country.





Valucard had last week dismissed Interswitch’s Verve cards claim to be EMV compliant saying its Visa and VPay cards are the only EMV compliant cards in the country. Interswitch in a swift reaction said Valucard claims is a lie and unnecessary de-marketing. It said the truth is that its Verve card is an EMV compliant card with more features than any other in the world. Interestingly both Valucard and Interswitch are owned by consortium of banks with some banks belonging to both consortia.

EMV is an international e-payment standard developed by Europay, MasterCard and Visa to maximize e-payment security by replacing the current and fraud prone magnetic stripe cards with EMV Chip and PIN cards Chip (EMV).
It represents the latest in payment card technology. Unlike the magnetic strip card that can be cloned by fraudsters, chip and PIN (EMV) cards cannot be cloned as a result it is considered safer and more secure.
Against this background the Central Bank of Nigeria (CBN) directed banks to stop issuing magnetic strip cards and migrate to chip and PIN (EMV) cards on or before April 30th this year.

Consequently, last year Interswitch Nigeria Limited, the sole switching company to Nigerian banks with the largest payment cards issued on its Nigeria Debit Card Scheme, developed and introduced Verve cards which is a chip and PIN (EMV) compliant card. The card was introduced to replace the 28 million magnetic strip cards on its network.
Already about six million Verve cards have been issued while 12 banks have ordered for Verve cards. The banks are Intercontinental Bank, Nigeria International Bank, Skye Bank, Bank PHB, Oceanic Bank, Ecobank, First City Monumental Bank (FCMB), First Bank, Stanbic IBTC, Unity Bank, Zenith Bank and United Bank for Africa (UBA).

Valucard however was the first to introduce EMV compliant cards. In 2004 following its partnership with Visa International, the company introduced Visa and VPay cards which are EMV compliant.  The company in a statement last week however warned that the banking public should disregard any payment card claiming to be EMV compliant.
The statement from the company said, “Consequent on the many issues associated with magnetic stripe cards, ATM fraud and the CBN directive to banks on migration to Chip and PIN EMV compliant cards, Mr. Kyari Bukar, Managing Director/CEO, ValuCard Nigeria Plc has called on stakeholders for transparency and presentation of facts as they are for the overall benefit of players in the emerging e-payment solutions industry”.

Mr. Bukar made the call as a response to the numerous inquiries by cardholders and some issuers for a better understanding of the EMV phenomenon, especially with the ongoing campaign for migration from magnetic stripe cards. In his words “EMV compliance transcends the ordinary Chip and PIN feature of a payment card scheme”. EMV is an international e-payment standard developed by Europay, MasterCard and Visa to maximize e-payment security by replacing magnetic stripe cards with EMV Chip and PIN cards.

To be EMV compliant, he said “suggests that a card scheme has the following; a certified EMV processing platform with EMV Switch, EMV compliant third party processor, EMV ready front end processors and EMV personalization bureau; truly EMV card and EMV acceptance devices/channels which include online/web transactions, PIN Encryption Device (PED) certified (PoS) terminals and EMV double-length key driven ATMs”.

According to the ValuCard boss, “a truly EMV compliant card scheme also has comprehensive rules for chargeback to safe guard the card holder in case of fraud”. Chargeback is a world practice that occurs when a cardholder or buyer asks his issuer/bank to remove a charge from their credit/debit card statement. The card cardholder will provide the Issuer/Bank with explanation about why a transaction is being disputed”.

Continuing, he said “two common reasons for reversals or chargeback are: a transaction that was not done by the buyer/cardholder or a buyer makes a purchase, but believes that the seller failed to fulfil their side of the agreement (e.g. did not ship the item, shipped an item that was very different from the seller’s description, or the item was damaged when the buyer received it)”.

The cheering news he further informed is that “There is at least a Visa-certified EMV processor and PoS Acquirer in Nigeria (ValuCard Nigeria Plc) that has been deploying EMV-certified Points of Sale terminals to accept Visa EMV cards, working with Nigerian Banks to upgrade their ATMs to EMV Levels I and II as well as issue truly EMV cards such as VPAY and Visa cards.”

Mr. Bukar advised banks and their customers to ensure that they replace their magnetic stripe cards with cards that are certified by EMVCo such as Visa and VPAY cards which are the only Chip+PIN cards issued in Nigeria that have such certification. He warned the public to beware of cards or card schemes that lay claim to being EMV without certification by EMVCo.”

But in a swift response, Chief Marketing and Client Engagement Officer, Interswitch, Mrs Bolatito Adeniyi-Aderoju said that Valucard’s claim is not true. She said that the chip card in Verve card is a Master Card chip card which is EMV compliant. “Verve is a pan-African innovative chip and PIN (Personal Identification Number),   EMV compliant payment card.  The “M” in the middle of EMV stands for Master Card so the Master Card chip card in Verve is the latest version of EMV compliant Master Card i.e Mastercard MChip 4 technology. The truth is that Verve is the only EMV card with more features than the others.

“What we did was to look at the features in all EMV cards across the world and add value more value to it. For example it’s the only EMV compliant card with a loyalty programme and MoneyGuard, which allows cardholders send an SMS from their phones to block their cards should they suspect any unusual activities. Also though the chip card used is a Master Card chip card we decided not to use the Master card brand for it because we did not want to promote an international brand.
“We want the world to know it was developed in Nigeria by Nigerians and hence dismiss the claim that no good thing can come out of Nigeria. We believe the best way to grow this market is by adding value and not by engaging in de-marketing.  Anyone with a good product should show the attributes and features of the product but not to de-market others,” Adeniyi-Aderoju said.



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