The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Royal Bank of Canada (RBC) last night said it was racing to replace its “magnetic strip” debit cards in The Bahamas after fears were raised that they are vulnerable to fraud.

The Canadian-owned bank, in a statement, said it was “working diligently” to launch a replacement debit card to Bahamian clients after Kendrick Christie, president of the Association of Certified Fraud Examiners Bahamas chapter (ACFE), voiced concern it was employing “outdated technology” to safeguard its clients from potential abuse.

Mr Christie, who runs his own accounting firm, asserted in a statement that “many merchants are amazed” that RBC has yet to switch to “superior chip and PIN” technology with cashiers in the US often holding such cards “in the air as if looking at an ancient cassette tape or a counterfeit dollar bill”.

“I am concerned that RBC Royal Bank (Bahamas) continues to issue its debit cards with magnetic strip card technology. This magnetic strip technology is now outdated and has been replaced by the vastly superior and secure chip and PIN technology, which was introduced in the UK in 2004 and in the US system-wide in 2015, some seven years ago,” he argued.

“As certified fraud examiners, we are personally dismayed when using the RBC debit card which doubles up as a Visa card, especially abroad as many merchants are amazed that a bank in this day and age would still be issuing magnetic strip cards.

“We have heard from fellow Bahamians who say they have had cashiers in the US stop to hold the RBC debit card up in the air as if looking at an ancient cassette tape or a counterfeit dollar bill. For a nation that issued the world’s first Central Bank-backed digital currency, this should be truly reflective and embarrassing same time,” Mr Christie continued.

“We are now in a world where payments can be made through cryptocurrency, in The Bahamas through the Sand Dollar, and what I call the money service providers’ digital bank-like wallets. Magnetic strip cards increase fraud risk. It’s high time RBC Bahamas gives the Bahamian public a firm date in 2022 when it will issue all debit cards with chip and PIN technology. This is badly overdue to say the least.”

RBC, in its statement to this newspaper, said it is working diligently to launch its Visa debit card “to replace existing magnetic stripe debit cards in The Bahamas. We are taking a phased approach in rolling out the new Chip and PIN and contactless card, which is currently underway in our Trinidad market”.

It added: “We assure our clients that they can continue to use their current debit cards to make face-to-face and online payments with peace of mind, as RBC provides 24/7 fraud monitoring protection.”

However, Mr Christie added: “RBC apparently has been phasing in chip and PIN for its credit cards but, in our expert view, to continue to issue debit cards with this magnetic strip card technology is not good risk management and exposes its customers to increased fraud which can only cost the bank more in the long-run in terms of service strain and employee time.

“I wish to add that Chip and PIN cards are the world standard. Chip and signature cards are also in circulation, and contact-less cards are now standard features on many cards. In recent years, Europay MasterCard and Visa or EMV chip cards have overtaken magnetic stripe cards, comprising 83 percent of transactions worldwide.

“It is estimated that EMV transactions comprise 90 percent of transactions in Europe. This means, as an RBC customer, you are travelling into countries that are using the more advanced chip and PIN technology and they do so because this reduces the risk of fraud,” the ACFE Bahamas president added.

“The UK, for instance, has required Chip and PIN cards since 2006, some 16 years ago, and credit card fraud is estimated to have declined by £80m between 2006 and 2014.” Mr Christie argued that magnetic strip cards are more vulnerable to skimming, where fraudsters insert a device into an ATM (Automated Teller Machine) to obtain the customer’s financial information.

He added that Chip and PIN cards have better security because customer information is not stored on the magnetic strip. Instead, these cards have a microcomputer chip that issues a new encrypted code each time the card is used at an ATM, making it difficult for fraudsters to hack the information.