Holistic approach
Such solutions only address one specific requirement, however. Companies anticipating more widespread use of smart cards may want to take a more holistic view of their needs. Nevertheless, realising that vision can be like opening a series of Russian dolls: there's always another surprise waiting.
Combined with the tighter IT budgets occasioned by current economic uncertainty, it's unlikely that smart cards will become widespread within corporate environments any time soon.
Most businesses just can't build a good business case around the cards: since they offer no potential for increasing profits, they're still seen as an unnecessarily complex solution to problems that are adequately handled using cheaper magstripe technologies.
The customer promise
Where smart cards are gradually gaining ground, however, is in customer-facing applications such as loyalty programs or multi-function membership cards.
This is a field that was first explored in the mass market by American Express, which recently launched its Blue smart card-credit card combination and was soon challenged by ANZ Banking Group's First and Gold cards.
Both cards combine a chip-based smart card with traditional magstripe, allowing the cards to be used in existing point-of-sale machines while supporting additional applications as necessary. Blue is based on Gemplus smart cards and software built for Amex by an unnamed French company.
By combining the cards with high-tech capabilities like online billing and Internet fraud protection, American Express has targeted them at high-income, high-value customers who are likely to be most interested in ancillary offers.
"We started looking at a new credit card product twelve months ago, and we wanted to do something different," explains Mark Rayner, director of business development with American Express.
"It's not easy to differentiate in the credit card market. Surveys showed that loyalty was sexy and security taken for granted, so we went off and built the smart card in that way. It's gotten a very positive response in the marketplace."
Although he won't specify how many Blue cards have been issued so far, Rayner said upake is meeting the company's targets-particularly for retailers, who like the smart card's promise of supporting multiple applications in the future.
This will let Amex administer loyalty programs on behalf of retailers, or allow them to load their own applications if they prefer. Some 300 Amex Blue-capable terminals have been installed so far, but Amex is committed to growing this number quickly over time.
Because financial institutions play such a major role in customers' everyday lives, many believe initiatives such as Amex Blue and ANZ First are critical in raising the public's awareness about smart cards-and, by extension, justifying a business case for investing in the technology.
This will become even truer as banks begin to issue digital certificates compliant with the Commonwealth government's ABN-DSC (Australian Business Number Digital Signature Certificate) standard, which were recently accredited under the government's Gatekeeper authentication scheme.
Banks' strong role in promoting smart cards echoes the experience in Europe, where financial institutions have effectively set the pace of their rollouts by deploying terminals and offering compelling smart card applications.
Similar support in this country is likely to be a key factor in encouraging widespread use of smart card solutions.
"In the last three years in Australia, we would not have delivered any EFTPOS devices that don't have smart card readers," says Wens Brinkman, general manager of Intellect Australia, which has long offered smart card capabilities in its point-of-sale devices and derives 70 percent of its revenues from European customers.
"They're physically able to [handle smart cards] but there's still work to be done on the software side," Brinkman continues. "So far, there hasn't been that trigger to drive it; the problem is that we [in Australia] don't have a problem. But in the financial world, that trigger will be the combination of adopting the EMV standard and customer awareness of the higher level of security that smart cards provide."
It's obvious...isn't it?
Probably 4 or so factors affecting Smartcard deployment in Australia.
1) The cost of outlaying new POS terminals to accept smartcards. There are few initiatives out there. AMEX is a classic example. They deployed their new chip card but where are the readers. ANZ looks the most promising and are in the process of upgrading their ATMS and POS terminals to accept their own branded cards.
2) Magstripe card fraud is relatively low in Australia and banks cover the cost of any fraudulent transactions, so there is no real advantage for customers to transfer over to the new schemes.
3) Apart from Financial, GSM, and some security based applications, there's no real interesting applications for customers.
4) There are no dominating Smart Card standards. Telstra initiative at Adelaide UNI was a disaster. There needs to be an open and free SC standard (without any fine print). There are more smartcard forums and other group bodies, than actual standards.
5) Serious investment no were to be found for smart schemes. Whether this is a failure to deliver affect businesses cases, or no interest is difficult to tell.
Rob