A Survey of challenges in implementation and application of credit card systems in the banking industry in Kenya

Abstract

Credit card usage is gaining wide spread acceptance globally and has become one of the preferred mode of payment. A credit card system is an internetworking of hardware components at the various transaction points that have been carefully chosen so that they work well together with application software components or programs that support the system. The development of the credit card is probably the most significant phenomenon of the modern banking sense. The motivation of this study was brought about by the slow increase over time in the use of credit cards in the Kenyan society despite the numerous benefits of the service to both cardholders and merchants. The objective of the study was to establish the challenges facing the implementation of credit card systems in the Kenya banking sector.

Data was collected using questionnaires and was administered to credit card issuing banks The population of study comprised of 165 respondents that comprised of senior level managers who are the decision makers to the systems that the bank should use for its operation and the second group were the supervisors and clerks who are the end users of the system and have information on consumer satisfaction. The sample size of each bank was determined on the number of people who directly use the credit card system.

The study concluded that banks are faced with various challenges in implementing credit card systems which has transcend to card holders and merchants. These challenges include lack late monthly statements to customers, insecurity of data and lack of reliable system connectivity. This has led to less penetration of the credit card culture in the Kenyan society. The researcher recommended extensive training of. merchants and cardholders by the card schemes (Visa and Mastercard) on credit card fraud detection Extensive security innovativeness to secure the credit card systems is required as most banks have partnered with merchants to have co-branded cards for instance the Barclays-Nakumatt card that gives consumers smart points and discounts in certain stores. Lastly, the Kenyan judiciary needs to enact laws to apprehend credit card fraudsters hence more banks will be confident in investing on the credit card services on their Bank portfolios.