EMV - The Next Phase

Friday, December 1, 2006

With the recent finalisation of the chip and PIN migration in the UK, Smart Technology Solutions Limited finds it timely to look at what the future holds for both EMV and smart cards in general in the UK. Will the UK be a prelude to how EMV will be rolled out in other countries and a predictor for future technology globally?

As EMV is rolled out, retailers are beginning to look for new ways to increase their ROI on their investment in smart card infrastructure. Various options are being touted as the newest technology, some of these include e-Gift, e-Purse and contactless technology. However, with all these potential opportunities for harnessing smart card technology, there needs to be a clear value proposition for the retailer, the consumer and the card issuer. Many schemes have failed over the years by only providing benefit to one of these parties. Although smart card technology allows us to improve efficiencies and deliver innovation, we will see a much greater focus on the value proposition defining the technology, not the other way round.

The first way that the technology partners of retailers can look to add value is through the re-use of existing technology. Retailers, particularly in the UK, have spent a large amount of capital upgrading their Point of Sale infrastructure and payment systems to accommodate the upgrade to chip and PIN. It is imperative that retailers are able to get the most out of the investments they've made, and this is where the smart card industry can help them. Examples of instances where the use of the chip & PIN infrastructure might be extended include:

mobile vouchering through the existing PIN pads
enhanced EMV card-based applications such as loyalty and instant redemption
the addition of small biometric fingerprint readers to allow retailers to have a cheap upgrade path for fingerprint recognition
contactless payments
It is this interaction between devices to empower the smart card that will prove the exciting proving ground as the smart card enters its next stage of development.

Loyalty and transit are both areas that have big potential in terms of integration with retail systems, and for the use of data. Biometric payments are also interesting as a future development. Companies such as Pay by Touch have been pioneering the use of biometric payments and have recently piloted the concept in the UK at the Co-Op stores in Oxford.

"Retailers are not exploiting the potential of smart cards yet," comments VP for Business Development, Cameron Olsen. "Take a look at how, in the UK, Boots the Chemist has set up the PIN pad to pay, to handle their loyalty card scheme and to provide customers with multiple purchase offers, special deals and other information at the check-out. Any retailer can do this. What is exciting is looking at new ways we can drive this development for our partners to take advantage of what is an existing infrastructure. The PIN pad is the first customer touch point that they have interacted with. It is a massive opportunity."