Card fraud major concern

Outsourcing options may look attractive at first, but can be costly over time and for companies dedicated to continuing a card issuance program, the long-term cost benefits of in-house issuance are significant, Datacard's Technical Director of Smart Card industry, Jean Henaff said at a seminar, "'Smart cards/EMV Credit and Debit Cards - The Advantages of In-house issuance" at the JAIC Hilton recently.

He said that credit card and other financial card fraud is a major worry to all banks in the world and, according to the US Department of Homeland Security, the cost of credit and charge card fraud may be as high as US$ 500 million a year. And it's not just the credit card companies that are left in difficulty but cardholders often face economic losses, lengthy legal battles and struggles to re-establish clean credit records.

A few Sri Lankan banks who started issuing chip based financial cards (ATM, Debit, Credit) sourced from overseas card bureaus, have realized after a few months that this method is inconvenient, costly and a troublesome solution and that outsourcing can lead to forgery, counterfeiting and loss of sensitive customer data. Local bank officials said that it is impossible to issue a VIP card instantly or issue a card that has been lost or stolen at short notice, for someone travelling overseas for example, when an overseas bureau is utilized to issue these financial cards, he said.

Most financial institutions in the world issued Magnetic Stripe based Credit, Debit and ATM cards, and as counterfeiting of these cards and card frauds were increasing rapidly, the smart card was invented in France, to eliminate fraud associated with magnetic stripe based financial cards.

A Smart card is a plastic card which is the same as the conventional Magnetic stripe card but it has an embedded microchip that can be programmed/loaded with data, the card holders PIN No., and can also be used for electronic cash payments, telephone calls and other applications, and periodically refreshed for continued use.

He said that compared to a magnetic stripe card, a smart card is more secure. By having the chip on the card, it protects the encrypted information stored from damage or theft and gives greater capacity, while more information can easily be added or deleted from the chip.

Henaff explained all the issues related to the card industry based on actual experiences worldwide, and enlightened participants on the problems faced by banks when financial cards are sourced from third party bureaus.

Companies can gain and maintain Market Leadership by using in-house Smart Card issuance and could rapidly releasing new marketing promotions and schemes to stay ahead of competition.

The companies maintained full control over the entire card issuance operations, controlling inventory levels and issuing urgent.