Banks in Central Europe and the Middle East are in the process of rolling out chip cards, POS terminals and ATMs that support the EMV (Europay, MasterCard, Visa) standards.
EMV migration is expected to bring many benefits to card issuers and acquirers, including reducing the rapidly escalating levels of fraud losses and tackling the growth in 'skimming' attacks. Smart cards allow for the introduction of stronger security counter measures, enable offline PIN verification, provide the ability to support enhanced data and introduce new risk management capabilities.
The main driver in the Middle East is compliance with security mandates from the major card schemes and national card schemes such as SPAN in Saudi Arabia. A secondary driver is the services that will be enabled, and some banks are already making the extra investment to issue cards ready to handle multiple applications.
Banks are in a good position to leverage their trusted relationships with large customer populations, in conjunction with their existing ATM and POS network infrastructure, to use multi-application EMV smart cards in innovative ways. It is now possible to distribute new products quickly and dynamically without having to incur the cost of issuing new plastic.
Using the benefits of EMV, new applications can be added to a single card and a greater choice of card authorisation parameters are available. The complexity of EMV card personalisation and interaction with multiple types of online and offline POS terminals require a significant investment in training and testing to ensure the transition is seamless for the customer.
Testing is an important part of deploying any channel for the bank, and traditionally the testing of ATM/POS software, hardware and networks has been conducted manually with real people, cards and machines. Increasingly, financial institutions have realised that an automated testing regime is more efficient. With regards to EMV, the complexities of the EMV standard and many card fault scenarios cannot be easily replicated using a manual testing approach.
Unlike ATMs that are under the total control of the banks, the POS channel poses a unique challenge for acquiring banks that rely significantly on their merchants for the overall success of the POS service. As such, merchants need to be better educated on the ramifications of smart card transactions. Having access to tools that graphically portray the workings of the smart card and terminals can be an integral part of this education process.
Apart from Saudi Arabia, most of the countries in the Middle East are conducting signature-based POS transactions. Many customers are not used to entering their PIN at POS terminals, which may lead to cards being blocked due to forgotten or incorrect PINs. Banks require issuer-scripting capability to redress these issues. Unfortunately for the banks, these incidents are likely to occur at retail outlets and therefore the development of additional operational procedures and guidelines are required.
© Banker Middle East 2005
