Kina Blames BSP Chip Cards as Digital Revenue Stalls at K43.5 Million

Kina Bank’s digital revenue slipped to K43.5 million in the first half of 2026, from K43.9 million a year earlier. The figures come from the investor presentation Kina Securities Limited (PNGX/ASX: KSL) released with its half-year results on 31 August. A year before that, the same line had grown 15%, from K38.1 million. Kina puts the stall down to debit cards issued by another PNG bank that its EFTPOS machines, ATMs and online payment pages cannot accept.

Kina did not name that bank in its July guidance or its half-year results. Its 7 July guidance statement referred only to “interoperability issues affecting a major PNG bank’s newly issued debit cards,” which it said were “not caused by Kina Bank.” Two months earlier, on 5 May, Kina was more direct on its own Facebook page. “We wish to advise that some BSP-issued chip debit cards are currently unable to be used on Kina Bank EFTPOS machines, ATMs, and certain online payment platforms,” the bank posted.

Kina expects a fix before the end of the year. As of 4 November, Exepreneur found no public announcement from BSP, the Bank of Papua New Guinea or Kina that the fix had gone live.

A card that works on one network

The cards in question are BSP’s new Kundu chip cards. BSP said on 1 April that the phased move to its “proprietary Kundu chip-enabled cards” had been under way since August 2025. Ronesh Dayal, BSP’s group general manager for retail, said in the same release that the chip cards “will significantly reduce customers’ exposure to card cloning.”

BSP later pushed the cut-off for its old magnetic stripe Kundu cards to 31 August 2026, according to a BSP LinkedIn notice posted in late June. By mid-September, more than 890,000 customers had moved to the chip card, Papua New Guinea Today reported on 18 September.

Kina chief executive Ivan Vidovich set out the technical difference on the half-year results call, according to a transcript published by Investing.com. He said a bank “with a dominant market share” had replaced its magnetic stripe cards with proprietary EMV chip cards, instead of the Visa, Mastercard or UnionPay cards that other banks, Kina among them, now issue.

Kina moved its own customers to Visa debit cards in October 2024, the Bank of PNG’s national switch statistics page records. The domestic switch no longer captures those Visa transactions. Westpac is moving its customers to Visa cards, according to the same page. TISA Bank has told its customers on Facebook that its old proprietary cards will stop working on 31 January 2027, and is replacing them with a Visa debit card.

BSP’s KunduCard help page still tells customers the card “may also be used at other Bank ATMs and EFTPOS terminals in PNG where the KunduCard image is displayed.” Kina’s May notice said some of the chip cards could not be used on its terminals at all.

Why the acquirer loses

Every card payment involves two banks. One issued the card. The other owns the machine on the shop counter or the ATM on the street, and earns a fee for handling the transaction. Kina describes its side of this as an “extensive payment acquiring business,” covering EFTPOS, e-commerce and ATMs, in its July guidance.

When a BSP cardholder cannot pay on a Kina terminal, the shop with that terminal can lose the sale unless the customer has cash or another card, and Kina loses the fee. Vidovich said in the results statement that the matter “altered the competive landscape in payments acquiring channels, reduced customer choice and constrained transaction-related revenue growth.”

Kina expects the damage to last beyond the technical fix. “The competitive changes in the payments acquiring market resulting from this issue may mean that a full revenue recovery extends into 2027,” its investor presentation says.

BSP has offered its own customers a workaround. Customers whose chip cards are rejected should try another BSP terminal, use its Wantok Wallet phone service or visit a branch, the bank told TVWAN News. Papua New Guinea Today carried the response on 18 September.

BSP’s fee schedule effective July 2023, the latest Exepreneur could find, lists a K2.50 charge for a cash withdrawal at another bank’s ATM using a BSP card. That charge only applies where the other bank’s machine accepts the card.

The switch in the middle

The national switch is run by the Bank of PNG through its Retail Electronic Payments System, known as REPS. “The National Switch enables cardholders to use any REPS member’s EFTPOS terminal or ATM, regardless of the financial institution they belong to,” BPNG’s payments system page says.

BPNG’s 2025 annual report, published in June, said preparatory work had continued on “the REPS Chip Card project, scheduled for implementation in June 2026.” The project “will strengthen interoperability across domestic card payments networks and enhance security,” the report said.

Three months after that date, BSP told TVWAN that the rejections were caused by “an interchange upgrade that is still pending within the Bank of PNG Retail Electronic Payment System.” It said it was working with BPNG and other banks “to resolve the interoperability issue.” In a LinkedIn statement around 23 September, BSP said BPNG was “completing important upgrades” to REPS. Testing was in its final stages, BSP said, and it expected interbank card services “to be available very soon.”

Kina’s July guidance said the issue would be resolved “through the implementation of identified upgrades to the national payments infrastructure and participating bank systems.” Vidovich told analysts that participating banks, Kina included, “also have to make some changes to our tech systems so we can interact with that payments card data.”

Asked on the call whether Kina had recourse against the bank behind the problem, Vidovich said Kina’s actions had been “regulatory, both from the competition perspective, through also the financial services regulator as well.” He said the bank had taken independent advice on its options and that its main focus was working with the regulator and the industry on a technical solution.

BPNG’s statistics show the shared network shrinking as banks change cards. Interbank debit card transactions through REPS were worth K2.5 billion in 2025, down from K3.30 billion in 2024, the central bank’s national switch page shows. That is a fall of 24% on Exepreneur’s calculation.

Monthly value dropped from K173.89 million in January 2026 to K108.06 million in June, down 38%. Chargeable transactions fell from 958,298 to 696,343 over the same months, down 27%.

BPNG gives more than one reason. Its statistics page describes “a steep decline since January 2026 with BSP transition to proprietary chip cards and Westpac’s moving to issuing VISA cards,” and also points to fraudulent transactions from magnetic stripe card cloning. Visa transactions travel through the international network instead of REPS, so part of the drop is traffic changing channel. The switch figures cannot show how much spending was lost and how much was rerouted. The monthly table Exepreneur retrieved from BPNG’s page ends at June, before BSP’s 31 August stripe-card cut-off.

The cost for Kina

Kina reaffirmed its guidance on the August call. The bank expects 2026 net profit after tax of K132 million to K138 million, 15% to 20% above the K114.6 million it earned in 2025.

First-half profit was K59.7 million. To land in the range, Kina must earn K72.3 million to K78.3 million in the second half, 21% to 31% more than in the first, on Exepreneur’s arithmetic.

Fee and commission revenue, including digital channels, was flat at K85.4 million in the first half, the results statement says. Kina did not disclose how much acquiring revenue it believes the card problem has cost, how many Kundu chip transactions its terminals have declined, or how many merchants have moved to another acquirer. Exepreneur found no public estimate from BPNG or the Independent Consumer and Competition Commission.

“We believe that, regardless of which bank a customer or merchant uses, customers should be able to transact freely,” Kina wrote in its May notice. In June, Vidovich told Business Advantage PNG that Kina was “actively advocating” for “interoperability of payment systems and reducing the cost of banking for customers.”

Kina’s investor presentation lists resolution of the cards interoperability issue as “expected by year-end, supporting future earnings growth.” The REPS chip card upgrade that the Bank of PNG scheduled for June now has eight weeks to arrive inside Kina’s own deadline.