Credit card fraud in SA last year amounted to about R350 million, according to Standard Bank, citing figures compiled by the South African Banking Risk Information Centre.
The biggest contributors were fraudulent use of lost and stolen cards, which soared 231% to about R150 million, and fraud involving counterfeit cards, which increased 71% to more than R120 million.
Standard Bank says, although not a total solution against credit card fraud, the ongoing roll out of chip-encoded bank cards is expected to have a significant impact on fraud involving lost and stolen cards, mail non-receipt and counterfeit cards.
Carolina Reddy, Standard Bank's director of card business services, says the bank is issuing 20 000 chip-encoded credit cards a month, and the bank plans to increase the roll out to 100 000 a month later in the year.
The roll-out is part of the international move towards compliance with the EMV (Europay, MasterCard and Visa) standard that is seeing banks issue cards with embedded chips, held to be more difficult to clone than the present magnetic stripes.
The chip cards also add another level of authentication, as they require their holders to enter a personal identification number (PIN) at the point-of-sale.
While most local banks have begun to issue the new EMV-compliant cards to their customers, Standard Bank is believed to have the highest number in circulation at present. The bank began an aggressive roll-out to customers in September last year.
Reddy says the bank has already issued 180 000 chip and PIN cards and intends to have a million in the market by the end of the year.
She says in the UK, where the roll-out of chip and PIN cards took place from 2004 and 2006, there had been a significant drop in counterfeit, lost and stolen, and mail non-receipt card fraud. Criminals in the UK are now focusing on card-not-present fraud.
Leon Barnard, director of secured lending and credit card at Standard Bank, says, while it is easy to clone the magnetic stripe on a card, known as "skimming", it is practically impossible to copy a chip card.
However, he says: "Consumers are still urged to remain vigilant and adopt secure transaction practices when either swiping or drawing from an ATM." The bank points out that cardholders need to keep their PINs from being identified, for example.
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