Smart cards are taking off in a big way, with MasterCard and Visa alone accounting for about 400 million cards worldwide already.
That number is expected to surge next year as bank cards make the transition from magnetic stripe to EMV chip technology.
EMV is a global standard for smart payment cards aimed at combating the kinds of fraud that can take place using cards based on magnetic stripe technology.
MasterCard announced this week that its customer financial institutions have issued more than 200 million smart cards worldwide.
"This key milestone confirms that global EMV chip deployment on MasterCard payment cards is now entering into a new phase of mass-market adoption in Africa, Europe, Latin America, Asia and the Middle East," the group says.
According to MasterCard, 40% of its 200 million smart cards now carry an EMV chip. Those EMV cards are accepted at about 1.5 million EMV terminals worldwide, representing an 85% increase in such terminals in the year to date.
"2004 represented a period of significant progress for MasterCard with regard to its global chip initiatives in SA as well as globally," says Gary Byrne, VP of payment solutions for MasterCard Southern Africa.
In SA, banks are expected to begin a significant roll-out of EMV cards next year.
Major roll-out
Visa EMV specialist Cedric Edwards says internationally Visa will have issued 200 million smart cards by the end of the year. At the same time, it expects that the number of EMV-compliant terminals will number 4 million.
"Most of the activity is in Europe," he says. "The UK made a decision quite a while ago to move to chip. France has been using chips for 20 years and is now also migrating to EMV."
He says banks in SA should start issuing EMV chip cards from the first quarter of next year. SA has taken longer than Europe partly because banks here need to certify with Bankserv in addition to MasterCard and Visa.
Bankserv is a payment clearing house that provides interbank electronic transaction switching services.
He adds that American Express is also moving to chip, which means that point-of-sale terminals will not only have to be MasterCard and Visa compliant, but Amex compliant as well.
However, EMV is only one of three major roll-outs expected to lead to an explosion of smart cards in SA next year.
According to a recent report by World Wide Worx and Razor`s Edge Business Intelligence, from next year all new credit and debit cards will be smart cards, requiring a roll-out of at least 12 million smart cards over five years.
However, the single biggest project will be the new Home Affairs National Identification System (Hanis), requiring the replacement of identity documents with about 30 million smart cards during the same five years.
At the same time, Telkom and the mobile network operators are expected to add another 20 million cards next year alone.
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