A new element of the Byzantine and highly political battle over chip card standards came to New Zealand last week when senior Visa International executives flew in to pitch Visa’s would-be chip card standard to local banks.
CCPS — chip card payment service — is a technology created by Visa to let issuers migrate credit and debit from magnetic stripe cards to chip cards. At its most basic level, the addition of a chip to the card adds a layer of encrypted security on top of existing mag-stripe protection of “static” data which could be used in counterfeiting. But it also provides the opportunity for other services on the same card.
Visa has achieved a big win for CCPS in Britain, where APACS, the umbrella body for bank debit and credit services, has adopted its technology as the UKIS specification, and is helping work on national chip card standards in Malaysia, Korea and China.
In Britain, the entire banking system is likely to migrate to chip cards next year, and Visa will eventually take the same path with its 550 million cards worldwide. But officials admit they face a unique situation in New Zealand, where the six major banks own equity in Mondex, the e-cash system driven by rival Mastercard.
But Robert Hepple, Visa’s Asia-Pacific chip card head, insists Visa’s high-powered mission is not partisan. “We’re not making competitive advantage out of this, we’re not making it proprietary to ourselves. The objective is to have just one terminal at every point of sale. It makes sense to have everything done on one piece of equipment.”
APACS began work on chip cards in the early 90s after a rash of serious card frauds, but Hepple, admits the low level of card fraud here means “any savings on a security level will be very minor. The main offering is a better credit card. A chip card is a faster operating card, and it can be used to further secure new products like Visa Cash, loyalty programmes and electronic commerce.”
CCPS is an implementation of the EMV chip card standard (itself built on ISO 7816) which Hepple says has been adopted by the Malaysian government as the base of all smartcards in its jurisdiction — including drivers’ licences and ID cards.
Chip-based credit cards could be embedded with instant purchase authorisation up to a certain value, and could even double as stored-value cards, but Hepple confirms that Visa has no plans to allow card-to-card transfers as Mondex does. Central banks in place such as Malaysia regard that as a plus, he says.
Visa is likely to press its “open” system and flexibility as an advantage to issuers over Mondex, which is committed to proprietary technology and, as yet, a single chip supplier. New Zealand country manager Daniel Jeffares says the Visa brand could appear in different territories on quite different systems — and even on the Proton system licensed by American Express.
Mondex representatives were unable to comment.