The smart cards, which are all branded with the distinctive Visa v.chip logo, allow payments to be made at point of sale without cash or cheques changing hands. The unique chip technology enables instantaneous transfer of funds without the usual lengthy and cumbersome authorisation procedure.
"The two banks` smartcard initiatives will bring the convenience of cashless shopping to customers," says Visa International`s regional president CEMEA (Central Europe, Middle East and Africa), Anne Cobb. "Because they are Visa-branded cards we expect to see them widely accepted by retailers throughout South Africa."
Both banks have already issued 500 000 smartcards to their customers. This number is set to rapidly increase with the onset of pre-Christmas advertising and marketing campaigns intended to increase usage and acceptability of the banks` smart cards.
"We expect to gain critical mass in 1999 as more consumers begin using their cards at point-of-sale and more retailers start accepting these cards. Already, many of the largest retailers in the country, including the likes of Edgars, CNA, Computicket, Jet, selected Spars, Seven Elevens, Hyperpharm and Solly Kramers accept v.chip cards from both banks," says Mike Leeming, chief operating officer of Nedcor Bank and chairman of the regional Visa CEMEA board as well as a director of the Visa International board.
As of November, the v.chip cards will be accepted at 25 000 terminals around the country.
The FNB/Nedcor Bank Visa v.chip smart cards are pin-protected and have all the features of ordinary ATM cards and credit cards, but with added benefits.
Cardholders will be able to make purchases at any retailer displaying the v.chip logo and will also be able to use their v.chip smart cards for normal banking services at their own ATMS.
Smart cards can function either as debit or credit cards and each bank will determine the offering most suitable for client needs. Whereas the credit card allows usage against a pre-set credit limit, the debit card requires that there be available funds in the account.
The national smart card initiative embarked on by First National Bank and Nedcor Bank, which targets both the formal and the informal sectors of the market, will see the introduction of a new range of products that were not previously available to all customers. "Consumers who traditionally only had access to cash as a means of payment can now also use plastic for this purpose," says FNB managing director Viv Bardett. "This initiative significantly widens the base to which cashless payment services can be offered."
According to Bartlett, holding funds in the card can facilitate the cardholder`s budgeting process. `Because transactions are immediately recorded and can be tracked, cardholders cannot exceed their limit so there is no risk of overspending."
Bartlett also spells out the benefits to retailers. "A definite advantage is the speed of the transaction, which takes place off-line without dialing up to a bank`s mainframe computer systems for authorisation," he says.
"If the cardholder has the funds available, the transaction will be immediately approved. Speeding up the payment process also means less queuing for the consumer."
All participating retailers are equipped with smart card readers. The readers are an add-on to existing point-of-sale terminals such as FNB`s Speedpoint and Nedbank`s Nedlink.
FNB`s v.chip cards comprise a-cheque and a transmission account card. The cheque card can be used in place of written cheques while the transmission account card needs to be loaded at an ATM before it can be used for shopping and should it be lost, the unspent funds will be refunded by the bank.
Nedcor Bank`s current v.chip card offering centres on the newly launched Peoples v.chip credit card. The card, which will be made available through Peoples Bank, functions like an electronic wallet which is loaded to the user`s credit limit, allowing funds to be spent on retail goods and services.
Both First National Bank and Nedcor Bank are working on new smart card applications to augment their existing product range. "The technology allows growth in terms of future product offerings where multi-applications can be held on one card," says Leeming. "For example, the card could be a payment mechanism, hold loyalty points and serve as an identification or access card. This further enhances utility and convenience for the cardholder."
"The v.chip launch is the beginning of a journey into the future. Along the way we will ensure that all these benefits are realised," he says.
The national roll-out is the culmination of a process which began some years ago and which has seen both banks overcoming considerable educational, technological and logistical challenges.
"We have been operating smart cards for some time now, albeit on a limited scale. Following the successful implementation of a number of products, we can confidently take our smart card offering to the entire South African market," says Bartlett. "Visa`s involvement has given momentum to the acceptance of the Visa v.chip smart card at most leading retailers throughout the country," he says, adding that Visa`s support also demonstrated the significance of the product in the market.
The current implementation is initially limited to FNB and Nedeor Bank customers. Along with FNB and Nedcor Bank, Boland PKS will also be acquiring Visa v.chip smart card transactions through retail outlets.
Because the smart cards are Visa-branded this means that, in years to come, bank customers will only ever need to carry one card to access their bank accounts and make purchases anywhere in the world.
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