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Card fraud cost South Africans near R900m last year, according to the South African Banking Risk Information Centre, which also revealed that there had been an 18% increase in combined card fraud last year. The increase is a sign that criminals are very effective in getting their hands on bank customers’ money. As criminals are so successful in defrauding digitally; cash-in-transit heists in the country with greater risks to safety and being caught, have decreased. A new bank called Bank Zero, which will be South Africa’s first digital bank has developed a patented debit card that hopes to offer advanced security features to protect their customers from theft and fraud. Behind the bank are tech entrepreneurs, Michael Jordaan and banking innovator Yatin Narsai, who used to work for First National Bank. The debit card will be offered to the public in the first half of 2020 and offers a complex system of multiple card numbers for different payment types to enhance security. The article was first published on MyBroadband. – Linda van Tilburg
Bank Zero brings world-first tech to South Africa
By staff writer
Bank Zero recently went live with its debit card, which it said was the last step in completing its core value proposition.
Following this launch, the bank will now conduct rigorous security and system tests by simulating card attacks and testing card fraud detection.
The debit card is currently live in a beta stage, with Bank Zero planning to launch a public offering in the first half of 2020.
Bank Zero said its patented debit card offers advanced security features to protect customers from theft and fraud.
Starting a new bank has benefits
Speaking to CNBC Africa, Bank Zero founder and former FNB CEO Michael Jordaan said the advantage of starting a new bank is that you can do things from first principles.
“We looked at credit cards and found it interesting that while there is a number printed on your card, you can have a separate hidden number behind it,” said Jordaan.
“We designed our banking system that you can use this hidden number when you do online purchases.”
A patent for the debit card filed by Bank Zero CEO Yatin Narsai details how the debit card plans to cut down on fraud and theft while maintaining modern payment features.
Bank Zero’s debit card will have multiple card numbers for different payment types to cut down on the potential for fraudulent payments.
The card will have a standard card number printed on its surface which can be used for online payments, in addition to a separate card number stored in the magnetic stripe for physical purchases.
The patent also showed that a different card number could be stored in the EMV chip on the card, which would be used exclusively for payment systems which required it.
In this way, Bank Zero can prevent criminals from completing certain purchases with your credentials if they somehow manage to obtain them.
“Thus, in one example, all of these three card numbers effectively identify a different card… the single card will have stored thereon three different credit card numbers,” the patent states.
“For example, the first card number could be a credit card number for magnetic swipes only, the second card number could be for online purchases only and the third card number could be for tap and dip purchases only.”
The patent also stated that these card numbers could be implemented in combination, for example – the first card number could be a credit card number, the second a debit card number for online purchases, and the third a private card number for tap purchases only.
The bank said this approach is called “lane processing” and will allow Bank Zero to process transactions based on the card implementation characteristics and improve authentication methods.
Jordaan added that when you lose your card, replace your card, or when it expires, you do not have to go back to all merchants to change your card details.
“Apart from the convenience factor, it also safeguards users against criminals which may steal your physical card which has all the details to do online banking,” said Jordaan.
He is confident that this innovation can save consumers millions in preventing fraud associated with credit cards.
Additional security features
Jordaan said being a mobile- and card-only bank gives them the ability to use innovative security features.
“Limiting banking to an app on a smartphone has the benefit of seeing where the customer is and easily pick up when there is a fraudulent transaction out of a strange location,” he said.
Jordaan said there are also many other benefits associated with launching a mobile-first and mobile-centric bank.
“There are many things which you can do on a mobile phone which you cannot do at a bank branch.”
“For example, when you send a WhatsApp message you get one tick when it was sent, another tick when it arrives and blue ticks when it is read.”
You can do the same things with funds which are transferred – when it was sent, when it arrived, and when it is confirmed that the receiving party can use the money.
“We built our banking system to do these types of things from the start,” said Jordaan.
The drawing included with Bank Zero’s card patent is posted below, along with a brief summary of the labels.
- 10 – Bank Zero Card
- 12 – Alphanumeric card number 1
- 14 – Magnetic stripe card number 2
- 16 – EMV chip card number 3
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