SA SMART CARD SECTOR ON THE BRINK OF A BOOM

Computing

With the imminent launch of tens of millions of smart cards into the South African marketplace, 2005, say the experts, is the year this technology finally takes off. South Africa is expecting three major smart card roll-outs this year – chip-based bank cards, the new national identification system and the issuing of more prepaid and SIM cards by the telecommunications network operators. Other projects are also in the pipeline.

The bank cards – referred to as “EMV-compliant” because they conform to a standard agreed upon by Europay (subsequently bought by MasterCard), MasterCard and Visa – have received much press recently, but the other projects will affect many more people. While at least 12 million EMV cards are expected to be issued in SA in the next five years, the Home Affairs National Identification System (Hanis) will see smart cards replace about 30 million identity books. The telecommunications network operators are expected to issue another 20 million cards this year.

Labat Card Technologies MD Alexander Georgiev says most banks in Africa intend to move to EMV only in 2007. “Naturally so. Most of them are either subsidiaries of large international banks like Barclays or Standard & Chartered, or they are local banks like Kenya Commercial Bank. It's too expensive for them to be the first in the world, so they would rather see their parents going through the establishment phase and then they will follow.”

But while the rest of Africa is behind on EMV compliance, various countries have begun rolling out other sizeable projects. In addition to the well-documented explosion of GSM cards in Africa's telecommunications market, many states are now implementing identification and other programmes. Nigeria has established a smart card-based voter registration programme and is planning a national identification card. Georgiev says other countries implementing such systems include Burundi, the Democratic Republic of Congo, Angola and Kenya.

The smart card offers several benefits over older technology, including capability for multi-applications and data storage, but the chief boon at present is the security aspect.

“Fraud is the old chestnut everybody has attached smart cards to,” says Gary Byrne, MasterCard Southern Africa VP for payment solutions. “In SA, fraud from skimming cards exists, but it's not a business case driver on its own. But fraud can move around pretty quickly. My view is that banks in SA have agreed to adopt EMV more as a fraud prevention programme than is the case in the UK.

http://www.itweb.co.za/sections/features/smartcard/feature050228.asp