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National Central Switch: Checkmate for ATM fruadsters

By Babajide Komolafe
The rising incidence of frauds perpetrated through Automatic Teller Machines (ATM) will soon abate following the completion of the National Central Switch (NCS) for electronic payment in the country.

ATM

The NCS has a special security feature that can block usage of payment (ATM)  card  in different cities across the country within short time interval. When  ATM fraudsters gets information about an ATM card, they create (clone) several versions of the card  and distribute it among their co_fraudsters located in different cities of the country.

Thereafter the card is used to access money from the account of the card holders in different cities and within short time frame. For example the card is used in Lagos and twenty minutes later the same card is used in Abuja.

This enables the fraudsters to withdraw huge sums of money from the account of ATM cardholders within 24 hours.
But with the NCS makes such fraudulent practice impossible and thus fulfil one of its core objectives which is to provide a mechanism for proactive detection of Electronic Fund Transfer (EFT)/ card frauds.

“The NCS has security features that ensures that once a card is used in a city say Lagos, that card can’t be used in another city say Abuja within a short time space like thirty minutes,” said Paul Lawal
“Once the NCS detects such card transaction, it will block it and hence frustrate the fraudsters”, he said at a press briefing on the NCS organised by Nigeria Interbank Settlement System (NIBSS).

The NCS is an initiative of the Bankers Committee, the umbrella body of banks’ chief executives and the Central Bank of Nigeria (CBN). The objective of the NCS is to provide the technological infrastructure that will enable members of the banking public to use their payment cards on any payment device (ATM, POS) irrespective of the bank or organisation that issued the card or deployed the payment devise.

Presently there are five organisations that offer the platform for banks to switch (exchange) electronic banking transactions among themselves. These companies, known as switches or switch operators are Interswitch, E_tranzact, Chamms, Card Technologies and Valucard.

For this purpose, these companies operates payment card scheme which are issued to by banks that belong to their scheme like the E_tranzact card, Interswitch card, Masters Card and Visa card. However bank customers holding any of these cards (issued by their cards) can only use the cards on devises deployed by banks belonging to that card scheme.  for example Interswitch Cards can only be used on ATM and POS deployed by banks on the Interswitch scheme.

Hence Interswitch cards cannot be used on devises deployed by banks on E_tranzact scheme.  The NCS is designed to put an end to  this restriction by ensuring that all payment cards are accepted by all payment devise in the country.

This, according to Lawal, who is the Managing Director/Chief Executive of NIBSS is known as Interoperability.
“Simply put, the main objective of the NCS is to ensure INTEROPERABILITY and attain ubiquities Card Acceptance in the industry. When this is achieved, all payment cards issued by banks in Nigeria will be accepted on all Acceptance Device deployed in Nigeria.

This will ensure that card holders will enjoy tremendous freedom to use their cards in a safe and secure manner in any place in Nigeria, while delivering substantial benefits to all stakeholders”, he said.
This, he added will deliver higher transaction volume and revenue for banks, switch operators, device owners; and higher sales and lower POS cost for merchants.

On the benefit of NCS to the economy, he said, “Also, the NCS shall deliver direct and immediate gains to the economy of Nigeria by providing great savings in foreign exchange as banks will not have to provide the technology infrastructures for direct connectivity to every switch initiative any  more.

The NCS is  a shared resource which players in the payments industry  will employ and rely upon so they can concentrate  in the provision of their respective core value positions to the banking public. The NCS shall enable new investors in the payments industry to get to the market and deliver value to the banking public faster. The NCS will create a critical mass in card usage in Nigeria, thereby promoting commerce and growing the national economy to the benefit of all.”

Following the completion of the NCS, a pilot NIBSS conducted a pilot scheme to test its effectiveness. This pilot scheme, according to Lawal involved two banks and payment cards belonging to different switch operators. “Card transactions passed through the NCS successfully during the pilot operations, and the installed NCS infrastructures, which operates 24/7 basis, performed as expected”, he said.

He said that all the existing switches have connected to the NCS as well as three banks. Three other banks, he said, are in the process of connecting to the central switch.  “With the successful completion of the pilot scheme, the NCS is ready for live operations”, he declared.


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