Nedbank has appointed French-headquartered Gemplus as its smart card supplier.
Joy Rees, head of card innovation at Nedbank, says the French company was chosen after several companies were narrowed down to a shortlist.
Sydney Gericke, MD of Nedbank`s card division, says the bank wanted a partner who was already able to supply the necessary cards, and Gemplus fitted that description. Many other candidates would have had to start building capacity from the ground up.
Gemplus also brought with it the international experience which Nedbank wanted to leverage.
One of the conditions Nedbank stipulated was that Gemplus open a local personalisation bureau and Rees says this will take place in the third quarter of this year, which is when the bank expects to start the bulk roll-out of smart cards to its cardholders.
Nedbank announced this week that it would start bulk issuing of chip-based cards to its cardholders from the third quarter of this year.
Gericke says a single-application smart card, with a 2KB to 4KB chip, costs Nedbank R16 per card, against R2 to R3 for a magnetic-stripe card.
The bank has spent more than R200 million on renewing hardware and software since 2004, when work began on replacing magnetic stripe-based cards with chip cards.
However, Nedbank says the cost is offset by the business case.
Banks around the world are migrating from magnetic-stripe cards to more secure smart cards to comply with the EMV chip card standards laid down by card associations.
Pieter Nel, senior manager of card innovation, says a magnetic-stripe card can be cloned using a R300 device whereas interrogating a single chip card would involve complex algorithms, a team of crackers and equipment worth hundreds of thousands of rands.
However, Gericke stresses that, to date, teams at various universities have failed to crack the EMV chips.
The bank says fraud in the local industry amounted to more than R100 million last year. Gericke says smart cards are expected to reduce this by 70%.
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