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News from Asia-Pacific

Malaysians Adopt Smartcards for Banking

Malaysia is introducing smartcards for consumer banking as 12 anchor banking institutions are replacing their 11 million automated teller machine (ATM) cards with multi-purpose chip-based cards.

The move to adopt smartcards was triggered by an increasing spate of card-related fraud losses from credit card fraud in 2001, which totaled RM40 million. The new generation of chip-based cards that are replacing the magnetic stripe card will be less susceptible to skimming and cloning.

Magnetic stripe cards have been in use for 30 years. However, they can be easily duplicated due to a lack of security features. Smartcards, on the other hand, hold certain information secret within a microchip and are more difficult to duplicate.

According to Malaysian Electronic Payment System chairman Datuk Amirsham A Aziz, domestic financial institutions have accelerated card replacement since January and all ATM machines for magnetic strip cards will be disabled in July.

According to a spokesperson at Iris Technologies, each chip-based card contains variable memory capacity and processing ability making it multi-functional. Each chip contains personal information and provides security for distance banking and remote online payments. The falling prices of chip-based cards in recent years have also made them more affordable for banks to issue to consumers, he said.

Three Applications

Bankcard is one of the seven Multimedia Super Corridor's flagship applications and offers access to three payment applications - the ATM, electronic debit point-of-sale (e-Debit) and electronic storage of monetary value (e-Purse). Bankers can also widen their scope of services to offer a variety of value-added services such as customer loyalty point management on a single platform.

In recent months, 4,000 ATMs were upgraded to accept chip-based Bankcards and e-Purse loading and 974 ATMs now allow cash loading. More than 3,000 merchants are equipped to accept e-Debit and e-Purse. Consumers can withdraw cash, transfer funds, pay bills, check bank balance and make cashless payments for goods and services.

Credit card companies are also pushing the use of chip-based cards. MasterCard is implementing Magneprint after successful beta testing with CitiBank Bhd, HSBC Bank Malaysia Bhd, MBf Cards (Malaysia) Sdn Bhd, and Southern Bank Bhd. Magneprint, a technology jointly developed by MasterCard MagTek, reads the fingerprint of a stripe's magnetic particles. The distribution of the particles on the card is random and makes each card unique.

by Anita Devasahayam

(June 2003 Issue, Nikkei Electronics Asia)

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