SA gets smart

Johannesburg, 25 Jun 2004

Once local Eurocard, MasterCard and Visa (EMV) smart card testing has been completed in October, it will be up to the banks to decide when they wish to roll-out smart cards to customers, says Visa. South Africans have been expecting the technology for some time.

The technology was due to have been tested in a pilot project at the Canal Walk shopping centre in Cape Town in June, but it was decided by all parties concerned that it was too early to launch the project.

Cedric Edwards, Visa EMV specialist, says the technology is ready, but testing still needs to be completed, and discussions about education and the practical roll-out of the technology are still being conducted with all parties on a monthly basis.

Edwards says once testing is completed, banks will be able to begin providing users with smart cards. He adds that it is doubtful this would happen before the December holidays when users do all their Christmas shopping.

A long process

Edwards says many people are unaware that smart cards have been in development since the late 1980s.

Development was driven by the French, who implemented solutions in the early 1990s. By 1996, a global standard had been agreed upon and application development began, Edwards says.

"By 1999, we were ready to begin roll-out, which was planned to take five years. This was because banks across the world had to upgrade their back-end systems and all the ATMs and point-of-sale terminals. With testing due to be completed in SA in October, we are running on schedule."

Edwards says using a PIN, the user has the ability to pay from a number of accounts on the card. Unlike the current system where the credit card is often swiped through the point of sale device out of the user`s sight, Edwards says the user is now in full control by inputting the PIN and the amount.

"Whereas before the bank had a blanket way of measuring risk with users, with smart cards, the bank can set how many transactions can be made on the card before the transactions go through online. This lowers the cost to retailers and traffic on the bank`s network," he says.

Smart cards will still have a magnetic strip in case the chip is faulty, or for use in countries that do not have smart card readers.

A new era

Edwards says smart cards will reduce fraud and begin a new era in banking.

"The magnetic stripe has reached the end of its developmental phase, there is nothing new that can be done with it. However, there are numerous applications that will be developed for the smart card," he says.

In the future, ID documents and passports may be scrapped, with the information being stored on smart cards, Edwards says. Furthermore, the development of chip technology means that all this information could ultimately be stored on one device - the SIM card.

"Visa is already running a live project in Korea where cellphones talk to an EMV device using Bluetooth, allowing users to purchase items on their cellphone accounts. With there being far more cellphones in Africa than bank accounts, cellphones are ideally positioned to be the one ultimate device which carries all our personal information."