Standard Bank has become the first bank in South Africa to issue smart card credit cards with embedded micro-chips conforming to the international EMV (Europay, MasterCard and Visa) standards.
Dr Alewyn Burger, Director Operations, Payments and Direct Distribution at Standard Bank says the bank issued the first batch of smart cards to a group of staff members at its head office in Johannesburg as part of a three-month pilot project.
After the successful completion of the pilot project, the bank will start providing smart cards to customers. Standard Bank cardholders will receive EMV credit cards when their existing magnetic stripe cards expire.
Burger says the bank will carry additional costs of the card. "We will be compensated by reduced exposure to fraud and other misuse of cards."
Burger said that because of the escalation of credit card fraud internationally, the major card associations had developed integrated circuit card- (ICC or chip) based credit and debit payment standards called EMV (Europay, MasterCard and VISA). Banks around the world are in various stages of implementing products based on these standards.
"From 1 January 2005, any party to a payment transaction who is not EMV compliant will have to bear liability for any fraudulent transactions."
Smart card functionality through programs loaded to their microchips will benefit customers, merchants and the bank. Cardholders will enjoy greater security and the ability to have the card rendered inoperable if lost or stolen, merchants will save on costs with the ability to process transactions off-line and chargebacks directly related to fraud, and the bank will see a reduction in losses due to (counterfeit) fraud and have the ability to add products and services to the card in future, ensuring a better service to cardholders.
The implementation of this technology is costly as all ATM, point of sale (POS) and branch terminals must be upgraded to be able to interact with the chip and process the transaction.
"In future we can expect to see many additional functions on these cards. Additional banking products could be added to the chip, such as debit, loyalty programmes, personal information as well as other value-added business applications," said Burger.
Standard Bank's partners in this initiative include MasterCard International, ACI (smart chip management system), Namitech/G&D (card manufacture and chip software), Prism/Thales (personalisation security), Mosaic (front-end processor) and CSC/Dione (point of sale device).
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