Magazines Archives - 2009 June

Singapore explores interoperability
Story 5 - Focus

When the “Father of Advertising” David Ogilvy coined the famous phrase “Don’t leave home without it” nearly half a century ago in an advertising campaign for American Express traveller’s cheques, and later credit cards, little did the advertising guru realise that it was prophetic of the popularity that smart cards would enjoy in the 21st century.

Today, smart-chip-driven cards have become a way of life for most Singa - poreans, as the country moves increasingly towards a cashless society. They have evolved from being a symbol of exclusi vity into a must-have consumption tool following the release of the transit card that no one can do without.

With adequate infrastructure in place for the deployment of smart cards, along with the supporting technologies available, the revolutionary card has become pervasive, being used everywhere in the city-state from the transit arena to convenience stores and quick-service restaurants. They are also increasingly used for online payments.

“Singapore … is well poised to lead the region in the use of smart-card technologies for financial-card applications,” says Ram Ramaprasad, director of pro duct management at Zebra Technologies Corporation Singapore, a provider of computer software and peripherals.

“The new smart cards have large enough memory, built-in security and structure to store data for [use] in access control, transit, debit and numerous other applications,” he adds.

Favoured for “faster and more accurate transaction processing”, these cards now cover a “gamut of applications, from transit passes to university student identity (ID) cards”, Ram adds.

Moreover, the growing use of smart cards has created economies of scale that help defray the cost of deployment for their operators, gradually allowing more smart-chip cards (credit, debit or prepaid/stored-value cards) — and even the mobile phone enabled by smart chip — to incorporate contactless technologies such as near field communication (NFC) and UHF (ultra-high frequency) capabilities.

“Until recently, smart cards had less memory and were typically used for stored-value applications,” Ram notes, adding that contact smart cards had also cost less than the contactless version. “This is changing now. We are seeing contactless smart cards becoming less expensive every day.”

With the bigger memory in smart chips come more uses. In fact, retailers have been combining loyalty cards with credit- and debit-card functions for corporate branding, Ram observes.

“Retailers deriving incremental revenue from branded credit and debit cards deliver special bene fits to highervalue customers using smart cards,” he says.

With these cards now costing less to produce, retailers are also looking at incorporating UHF capability to facilitate promotions in their stores.

Zebra has recently introduced new UHF cards based on second-generation radio-frequency identification (RFID) technology.

“These new cards offer the ability to be read from a longer distance, making them suitable for border-control and customer-care applications,” Ram reveals.

To further expand the use of smart cards, the government-led Infocomm Development Authority of Singapore (IDA) has announced that it will “facilitate the establishment of an interoperable infrastructure” to fully extend the convenience of NFC technology to consumers via NFC-enabled mobile phones.

To boost the e-payment environment for consumers in Singapore, the IDA issued a call for collaboration on the “deployment of contactless point-of-sale (POS) terminals” last April to develop the local financial-services landscape through “next-generation e-payment infrastructure”.

According to a brief by the agency, the IDA plans to work with various vendors, namely operators of food courts, coffee shops, fast-food outlets, convenience stores and even vending machines, to increase the installation of contactless POS terminals over the next two years.

To achieve this, the IDA plans to invest S$1.73 billion (US$) in over 392 new infocomm projects in its current fiscal year.

Local e-payment solution provider NETS, too, is at the forefront of the initiative to expand card use.

Partnering local financial institutions United Overseas Bank, Development Bank of Singapore and Overseas Chinese Banking Corporation, NETS started trials for its contactless debit card last April.

The debit card, which doubles up as a storedvalue card, can be topped up at virtually any point using a personal identification number (PIN) functionality to authorise and facilitate debit.

“[At present,] top-up is done at ATM or CashCard terminals at car parks,” NETS’ assistant chief executive, Suman Balani, says.

“But we are taking [this facility] to retail points ... so consumers never have to worry that they do not have enough in their card balances to make purchases or pay transit charges.”

She maintains that the new card addresses stored-value smart cards’ weakness of requiring consumers to frequently top up the value.

“Now, with the PIN-Debit functionality, when there isn’t enough value in the card of the consumer paying for a purchase, the PIN-Debit transaction is instantly activated,” Suman says. All the customer needs to do is enter the PIN and the card gets automatically credited, she adds.

Over time, NETS wants to introduce these terminals to HDB (Housing and Development Board) estates — government housing developments — as well as at car parks and condominiums.

“So, we’re bringing the top-up infrastructure right to the consumer’s doorstep. They won’t even need to go to an ATM [to top up],” Suman states.

NETS plans to commercially roll out its new debit cards this September.

Issues

With the growing use of smart cards for financial applications, Ram warns that “there is an increasing need for security in smart cards”, not only to deter fraud and theft, but also to protect and authenticate user identity.

“We live in a world that is becoming more securityconscious every day. It is not sufficient just to have an ID card on you anymore. We need to incorporate in ID cards and driver’s licences the appropriate biometric data that conclusively establishes a person’s identity. Smart cards enable such biometric information to be stored in a chip for authentication,” Ram stresses.

NETS’ Suman also points out that, with stored-value cards, security comes in the form of ensuring that not all is lost when consumers misplace their smart cards.

“You don’t want to put too much value into the card because it’s all gone if you lose the card,” she advises.

“The beauty of the NETS Debit card is that for those who are not comfortable with the auto top-up function”, the PIN assures them of secure fund access, she says.

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