Friday, December 9, 2004

New chip credit, debit cards by 2006

By Our Special Correspondent

BANGALORE, DEC. 8. Your credit/debit or ATM cards will not be the same anymore by 2004. Instead of the familiar magnetic 
stripe, they will be embedded with a chip with lots of memory and your transaction at shops or ATM counters will become 
faster.

Making it possible for such cards to be used in India will be the Bangalore-based Advanced Micronics Devices Ltd. (AMDL). It 
has designed the first indigenously developed Electronic Data Capture (EDC) terminals to be used by those accepting cards for 
various transactions. These electronic payment terminals can meet the needs of banks, card associations and "loyalty 
programme" operators as well.

Reason

There is a reason for the new type of cards being introduced. EMV, the union of Europay International and Visa International 
was formed five years ago to manage and maintain the EMV integrated circuit cards specifications for payment systems as 
technology advances and implementation of chip cards become more prevalent. EMV has prepared a timeframe for implementation 
and for the Asian region, including India. The process hast to be completed by 2005.

Card frauds

According to AMDL, the chip cards will have advantages going beyond faster transactions. Card frauds are increasing and some 
countries in South East Asia - frequented by Indian tourists - are considered hotspots for counterfeit cards because the 
magnetic stripes are not secure.

"The chip cards will be guaranteed for security, at least for another 15 years till somebody learns to copy them," a 
spokesperson said.

The chip cards can go beyond credit or debit transactions.

Faster payments

The built-in memory will help in loyalty reward programmers promoted by major stores and the cards will facilitate faster 
payments at ATM counters and retail outlets such as petrol stations.

The "bonus points" can be stored in the card. In retail outlets, the shop clerk need not swipe the card and connect to the 
telephone line for authentication.

New terminals

The new terminals will deal faster with the customer.

The technology is here an what remains is for the banks and card issuers to replace existing cards, and for merchants' 
establishments and ATM counters to switch over to new terminals that can process the new cards.