Most people`s wallets usually contain at least one credit card, an ID card, driver`s licence, medical aid card, clothing account cards and a hand full of loose change. Imagine if all of that could be traded in for a single card with all the relevant information stored securely and accessible at any time.
This is the reality of the smart card - a card with an embedded microprocessor, able to store up to 500 times the amount of data than a magnetic stripe card.
Smart technology
SA will not only be making use of this technology, but is at the forefront of the development and manufacture of these cards, says Mike Serrao, MD of Prism Card Technologies.
The Johannesburg-based company was recently appointed by Visa to supply chip offline pre-authorised cards (COPAC) to Africa. The COPAC card works as a payment card, where a consumer can load money from their bank accounts onto the card and then use the card as a cash card to pay for purchases.
Unlike a credit card, no interest is incurred and merchants can rest assured that the electronic payment has transferred straight into their business accounts, circumventing the administration cost and delays as well as the risk of non-payment.
"Prism has been appointed by Visa as supplier of a scaleable low-cost portable pay system that can be moved into country after country, bank after bank. COPAC is not a competitive product to any e-cash products, it is purely an account system," explains Serrao.
"This is particularly useful for the previously un-banked sector and countries that don`t have the same online banking facilities as more technically advanced countries. This would have particular applications for countries such as Vietnam, Cambodia, India and parts of South America. These countries often do not have ATM support either.
"The problem of inflation in these countries, where citizens have to carry large volumes of cash to pay for a relatively small commodity, is also addressed by this COPAC card," he concludes.
Smart benefits
The benefit of smart card technology extends to both user and merchant. Loyalty programmes, long in use in a variety of industries, are more easily administered with chip technology. The extended data storage facility means that co-branding on cards is possible. This co-branding is working well with companies such as banks and airlines, which use the cards to tote up loyalty points and frequent flier miles.
Stirling McBride, Integrated Card Technology product manager, explains: "The smart card offers the retailer several advantages over the magnetic stripe card. The first and most obvious advantage is the amount of information that can be stored on a smart card. A smart loyalty card would normally contain a 1KB chip which can store 1 024 characters while the standard magnetic stripe card can only store 226 characters.
"A further saving made by the retailer is on administration and employment costs. The information stored on the smart card is updated continuously and can be accessed at any time. Therefore the issuing of statements to the customer becomes obsolete. Should a retailer`s network be offline when a magnetic stripe card is used, the consumer needs to call a customer care line the following day to enable the points within the system. However, with a smart card there is no need to use a dial-up connection, all transactions are instant and are processed directly on to the smart card chip. The smart card makes life easier for both consumer and retailer," says McBride.
Secure and smart
The security aspect of chip technology versus magnetic stripe technology is also a point in favour of the smart card. In the credit card world, syndication of information obtained by "skimming" is rife. This means that information can be obtained from an image off the track information, which is lifted and copied to a duplicate card with a different face and is then used to make fraudulent purchases.
Technology consultant Ovum estimates that up to 7 billion smart cards will be in circulation by 2004. The majority of these cards are expected to be used by telecommunications companies. Smart cards are becoming commonplace across the globe, but most especially in Europe. Even in SA many banks are migrating payment cards from magnetic stripe to chip technology. However, a lack of a common infrastructure is seen as a major reason for the slow introduction of smart cards on a global level. There are currently no guidelines or specifications to ensure that smart cards developed and issued in one country will be compatible in another.
A major payment organisation has been set up to create common security guidelines for the smart card industry. The Smart Card Security Users Group (SMSUG) is an initiative of key players in the global smart card business, including American Express, Europay International, MasterCard International, Mondex International and Visa International.
The group plans to share information on security threats and requirements, focusing on both chip hardware and card operating systems. SMSUG`s first task will be to set up a protection profile for smart cards. This will address the chip and operating systems security requirement for smart cards carrying EMV (Europay, MasterCard, Visa) credit or debit applications as well as other applications requiring high security. EMV represents an agreed upon standard within the financial services industry for chip credit and debit applications developed to ensure interoperability of both smart cards and smart terminals worldwide.
Big Brother
The psychological aspect associated with smart cards has possibly created hesitancy among the public to adopt smart cards. But society`s perception of Big Brother watching over you and monitoring your every move is slowly changing.
Smart card manufacturers feel that the issuing of personal identification numbers (PINs) on smart cards, a facility long used and familiar to customers comfortable using ATM cards, will go a long way towards allaying customer hesitancy.
A survey conducted in the US in July reveals that consumers with college degrees and a household income greater than $40 000 are more likely to use chip cards. Joseph M Alcodray`s five-week Internet survey found that 56% of respondents will be happy to use smart cards and are not concerned whether the programme is run by a financial institution or a merchant. The respondents did, however, stipulate that they wanted a card with solid security and easy loading facilities.
Joint ventures between banks and cellular service providers are using smart technology to increase data storage capabilities on SIM cards. This means that cellphone users can download information from their banks, and via wireless application protocol technology dial into the Internet and make payments for airplane tickets, concert bookings, share transactions and perform banking transactions. Once again the transaction is conducted only with PIN verification and across secure networks.
Nedbank, NedTel Cellular, MTN and Nokia have completed beta testing phases in this technology application and will be ready to conduct rollout within the next month or two. The new technology will enable business transactions to be conducted instantaneously and from any location.
European banking giant Natwest is preparing to initiate technology where an ATM will remind a client about an anniversary or birthday after a smart card transaction has been completed.
If only we could reach the stage where sensible and appropriately expensive gift options could be suggested as well, we would truly be entering the age of instant gratification!
Share