Smart cards advance in Canada
doption of computer chip-based smart cards continues to advance internationally. This time, it's in Canada. MasterCard Canada announced in December 2005 plans to introduce chip-enabled MasterCard payment cards by 2010.
The project will cost an estimated $1 billion. Twelve leading Canadian card issuers and five prominent acquirers, including First Data Loan Co., Global Payments Inc., Moneris Solutions Corp., Paymentech Canada and Unified Network Payment Solutions, will work with MasterCard on implementing the system.
"The shift to chip is one of the most important changes to the Canadian payments industry since its inception," said Kevin Stanton, MasterCard Canada President. He added that chip cards will bring unprecedented security, convenience and value to consumers and businesses.
Canada's actions are a major step toward widespread smart card use in North America, but the United States has yet to follow suit. The technology and means for infrastructure are there, however, said Randy Vanderhoof, Executive Director of the Smart Card Alliance, an industry trade group.
He pointed to MasterCard's OneSmart chip solution as being all-inclusive, but merchants and businesses need to be convinced. "It's an [exact] chicken-and-egg syndrome," he said.
"Merchants won't take the cards until enough people have them, but cardholders don't want them until they can be used at enough places."
Fraud prevention will serve as the catalyst for U.S. banks to issue smart cards, Vanderhoof said. The argument is that as other parts of the world move to chip cards, fraudsters will look elsewhere for easier targets, mainly here.
Bob Bucceri, General Partner at Chaddsford Planning Associates, said that the U.S. financial system, which differs vastly from those in other parts of the world, has prevented chip cards from catching on here.
Bucceri said increased instances in fraud have corresponded with increases in overall numbers of electronic transactions. "Is fraud really more prevalent proportionately now than five or six years ago?" he said. The answer is no, thus, not providing a real reason to switch to smart cards.
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