STRATEGIC PARTNERS
January 9, 2003
KUALA LUMPUR, Malaysia -- Asia-Pacific is leading the way in migration to Europay-MasterCard-Visa (EMV) chip cards, according to a report in e-media.
EMV smart cards contain a small 16-kilobyte computer chip that is capable of securely storing data that uniquely identifies the card and authenticates the cardholder. The chip electronic commerce (CEC) specification was created under the auspices of EMV Co, a standards organization established early in 1999 by Europay International, MasterCard International and Visa International to administer the EMV standards.
According to Mark Kamers, vice president New Products Engineering for MasterCard Europe, all new ATM and point-of-sale terminals in Asia-Pacific will be compliant with the EMV standards by this month. MasterCard expects magnetic stripe cards to be replaced by new EMV chip cards by January of 2004.
"In Malaysia, Bank Islam Malaysia was the first bank in Southeast Asia to launch the multiple operating system (Multos)-based M/Chip MasterCard credit card in April last year," said Jim Cheah, MasterCard International's vice president and country manager Malaysia and Brunei, adding that the bank has issued 30,000 of the chip cards so far.
(Multos is an operating system that allows multiple application programs to be installed, and reside separately and securely on a smart card.)
"Similarly, Public Bank Malaysia has recently installed its first EMV-compliant terminal but has yet to issue EMV chip cards to its customers," Cheah said.
According to the e-media report, liability shifts for issuers and acquirers in Asia will occur in January of 2006. Issuers will assume fraud-related liability if a non-chip card is presented at a chip-capable terminal in a country or region that has migrated to the smart card platform. Similarly, acquirers will assume fraud-related liability if a smart card is presented at a non-chip-capable terminal.
According to Kamers, the EMV migration path in the UK is similiar to Malaysia. UK banks and retailers are investing in a national migration to EMV chips plus the use of PINs at the point-of-sale by 2004.
One difference: While the main driver for the UK's migration is to reduce card fraud, loyalty programs and identification functionality are driving the EMV migration in Malaysia, Kamers said.
The UK is ahead of the European curve. MasterCard wants all ATMs, POS terminals and new chip cards in Europe be EMV-compliant by January 2005, for Maestro only. The liability shift takes effect from January 2005 as well.
(See related story Less angst over ATM regs in the UK)
In Latin America and the Caribbean, the targeted deadline for issuance of new EMV chip cards, as well as EMV compliant ATMs and POS terminals, is January 2004. For this region, the liability shift takes effect from January 2004, according to e-media.
In Africa, all new POS terminals, ATMs and chip cards are expected to be EMV-compliant by January 2006. The liability shift takes effect from January 2006.
