KUALA LUMPUR: The time is right to push forward with implementing smart credit cards (or chip cards) in Malaysia, according to Visa International Asia Pacific president and chief executive Rupert Keeley.

The market is just the right, and the national leadership provided by Bank Negara would make the implementation a straightforward matter.

Keeley said, the entire market in Malaysia consisted of some 40,000 point-of-sale (POS) terminals and four million Visa and other credit cards.

The total cost of updating cards and equipment would come to about RM30mil, he said, but this would pay for itself in only three years, chiefly by keeping fraud in check and by providing new services.

He said that traditional magnetic-stripe credit cards were vulnerable to "skimming" - the practice of reading the account number and other sensitive information using readily available readers, and copying this information onto the magnetic stripes of blank cards.

But because the data on each chip-based credit card would need to be individually dicrypted before it could be copied to another card, it would be highly unpractical to clone such cards that way, he said.

Keeley said losses from credit-card fraud were generally "a fraction" of 1% of total transaction volume in most countries.

In Malaysia there losses were only about 0.4% of total transaction volume, as reported in the media, but out of a total volume of RM9.196bil this percentage still amounted to RM42.5mil, he noted.

"Chip-based payment cards have proven to be the safest and most versatile payment tool available in the marketplace for long-term fraud prevention," he claimed.

"The business case for banks and retailers in Malaysia to migrate to chip cards and terminals is very strong indeed."

Malaysia leads

The other main driver for smart cards would be applications such as reward points schemes, loyalty programmes, mobile commerce, e-commerce, public and private sector services, telecommunications-related services, and highway toll payments.

Visa International Asia Pacific implementation chief Peter Maher said that Malaysian IT companies could play a big role in developing these smartcard applications.

Visa would help to bring these applications to the attention of its member banks, he added.

Malaysia was fortunate in that the Government and private sectors shared the same vision of implementing smartcards, Keeley said, and could thus move the process along much faster than many other countries.

Here, all the banks were already rolling out chip-based automatic teller machine (ATM) cards to replace the traditional magnetic striped cards.

The cards themselves would range in price from 99 US cents (RM3.76) for the most basic model to US$2.89 (RM10.98) for more sophisticated multi-application cards, exclusive of tax, printing, and personalisation costs.

The cards are available in "contact" versions, which must physically touch a reading device, and "contactless" versions, which carry an embedded antenna.

Some two billion of these cards had been issude around the world by 2000, and Visa has predicted this number would double by 2004.

Visa is cosponsor of the EMV (Europay, MasterCard and Visa) specifications for debit and credit application, and the GlobalPlatform industry standard for multi-application chip cards.

In 2003, Malaysia is expected to begin migration to the EMV standard, to combat credit card fraud and to comply with Bank Negara mandates.

Most local banks were in the pre-planning phase of their projects. Visa International country manager for Malaysia, June Seah, said Visa had already migrated Standard Chartered Bank to the new chip-based cards.

The Visa officials were speaking at an EMV forum held here last week.