While it is estimated that within the next decade, most payment cards worldwide will contain smart card technology, the real battle for wallet space may well be won or lost when banks issue smart cards to offer products and services with key partners.
The long-term potential of smart cards lies in the ability to issue cards that carry a wide range of applications from different industries. We don`t believe that people will want everything on one card, but multiple applications are a natural evolution.
This is according to Pierre Kotze, Executive Financial Services at Integrated Card Technology (ICT), the smart card manufacturer in the NamITech stable.
What is a smart card? Possibly your first contact with one, is the subscriber identity module or SIM card in a mobile phone. A smart card, also referred to as a chip card or integrated circuit card (ICC), is a plastic card with a small computer chip embedded in it. Usually the same size as the familiar plastic credit card, it looks no different, except for the small metal-coated chip.
Kotze said smart cards are beginning to gain in popularity rapidly and are poised to become one of the success stories of the past few decades, ushering in a host of benefits for banks, retailers and consumers alike. Today, tens of millions of smart cards are already used as payment cards, most notably in the UK and Europe, giving a clear indication that banks, retailers and consumers welcome the introduction of smart cards and the respective benefits offered.
"Factors driving the market today are security, mobility and convenience. This is where smart cards come in. They truly respond to the `anytime, anywhere` requirement. No consumer is interested in smart cards as such, but they are interested in what you can do with them. Their value lies in the way they assist in providing secure, but user-friendly access to information and services. Smart cards provide the best degree of extra security and they are completely portable."
Although the magnetic stripe card is still more ubiquitous - and is used for nearly all current forms of card-based transaction - we are rapidly witnessing the issuing of cards with improved levels of chip-based sophistication, which is very likely a pre-cursor to an extended migration from magnetic stripe to chip technology.
"You cannot just throw the magstripe card out overnight," said Kotze, "in co-operation with the microchip the magnetic stripe will continue to serve cardholders into the foreseeable future."
Capable of storing, processing and managing data, one of the more significant advantages of smart cards over the magnetic stripe is that it allows businesses to create on one card multiple applications tailored to the desires of the individual consumer.
The development of chip-based products requires the creation of an application program that resides in the card. A companion application program is created for the terminal and host systems that are aware of the product functions provided by the card. Card issuers willing to create the chip card aware portion of the terminal, or acceptance device, application program at the same time they develop the card application program, will be able to provide efficient deployment of chip card-based products.
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