Smart cards have had a limited impact on the retail sector up until now. But a host of new business applications are opening up which, by 2002, will start to bear fruit, thereby galvanising the true entry of smart cards into this industry.
This is according to Stirling McBride, new and emerging business executive at Namitech, the secure end-to-end solutions provider and smart card manufacturer in the JSE Securities-listed Nampak group.
McBride said that many retail players are currently using magstripe cards for business applications such as loyalty programmes. However, according to him, they will, within the next few years, realise the benefits of moving to smart cards. These benefits include flexibility, enhanced security and reduced operational costs.
"One of the most popular applications will be loyalty cards for customer retention. In addition, smart card-based gift vouchers dispensed from an ATM will in all probability become very popular with customers. There are only a few thousand smart cards in issue in the retail sector in SA right now, but there are definitely a number of business opportunities in the process of being exploited," said McBride.
One of these new business applications was recently launched by Integrated Card Technology (ICT), the smart card manufacturer in the Nampak group of companies. Phase II of a solution for Edu-Loan, which will create a virtual cashless system for students with educational finance from Edu-Loan, was recently kicked off.
Using smart card technology, ICT has implemented a system that means students are one step closer to the cashless world. The loan amount is loaded onto each student`s personal smart card, which can then be used for transactions at selected academic book stores, such as Juta.
Parents and students are expected to benefit from the control that smart card affords them since the card cannot be used at a terminal that has not specifically being designed to read the microchip on the card.
"There are many business applications such as this one waiting in the wings," said McBride.
He added that the latest research, released by Frost & Sullivan, points to the fact that smart cards will take off across the board in the next few years. From 1.79 billion in issue last year, it is anticipated that 3.66 billion will be in use worldwide by 2004.
"Magnetic stripe technology is, at more than 30 years old, becoming obsolescent rather quickly. It has become a major security risk with people being able to copy the magnetic stripe information and use it to defraud the card holder. In contrast, the smart card is capable of delivering business benefits that are not possible with magstripe technology. For example, smart cards can combat fraud through offline card authentication and cardholder verification methods, using sophisticated encryption techniques," said McBride.
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