Why banks must issue in-house cards

A timely and important Seminar highlighting the importance and the necessity for Banks to issue financial cards 'in-house' instead of sourcing them from overseas bureaus, was conducted for local banks by Data Management Systems Ltd (DMS) and Datacard Corp of the USA, the world leader in financial card personalization.

Credit card and other financial card fraud is a major worry to all banks in the world and, according to the US Department of Homeland Security, the cost of credit and charge card fraud may be as high as US$ 500 million a year.

It's not just the credit card companies that are left in difficulty - cardholders often face economic losses, lengthy legal battles and struggles to re-establish clean credit records.

Continuing DMS's heritage of transferring new technology to Sri Lanka that commenced in 1977, this seminar on 'Smart cards / EMV Credit and Debit Cards. The Advantages of In-house issuance' was conducted to help all card issuing banks operating in Sri Lanka to educate themselves on the world's best business practices in chip based financial card issuance DMS is Sri Lanka's leading Systems Integrator and has been providing IT solutions to Sri Lanka's Government.

Financial and corporate organizations for over 32 years. DMS represents most leading IT vendors in the world including IBM, Cisco, Diebold, Panini, Oracle and Microsoft among others.

In the area of secure financial card issuance solutions, DMS partners Datacard Corp. of Minnesota, USA, the dominant World Leader in this industry. Over 90% of all Financial Cards issued worldwide (ATM Cards, Credit Cards, Debit Cards, Smart Cards) and over 75% of GSM SIM Cards used on Mobile Phones are issued on Datacard solutions.

Datacard systems are also used to produce, personalize and deliver more than 10 million cards and personalize/issue more than 4.7 million smart cards worldwide, every day.

The seminar was conducted by a veteran of the Smart Card industry, Jean Henaff, a Frenchman who is Datacard's Technical Director based at Datacard's European operations office in France.

Previously, most financial institutions in the world issued Magnetic Stripe based Credit, Debit and ATM cards, and as counterfeiting of these cards and card frauds were increasing rapidly, the smart card was invented in France, to eliminate fraud associated with magnetic stripe based financial cards.

A smart card is a plastic card which is the same as the conventional Magnetic stripe card but it has an embedded microchip that can be programmed/loaded with data, the card holders PIN no., and can also be used for electronic cash payments, telephone calls and other applications, and periodically refreshed for continued use.

Compared to a magnetic stripe card, a smart card is more secure.

By having the chip on the card, it protects the encrypted information stored from damage or theft and gives greater capacity, while more information can easily be added or deleted from the chip.

A few Sri Lankan banks who started issuing chip based financial cards (ATM, Debit, Credit) sourced from overseas card bureaus, have realized after a few months that this method is inconvenient, costly and a troublesome solution and that outsourcing can lead to forgery, counterfeiting and loss of sensitive customer data.

Local bank officials stated that it is impossible to issue a VIP card instantly or issue a card that has been lost or stolen at short notice, for someone travelling overseas for example, when an overseas bureau is utilized to issue these financial cards.

Henaff explained all the issues related to the card industry based on actual experiences worldwide, and enlightened participants on the problems faced by banks when financial cards are sourced from third party bureaus.

Some of the advantages to banks with in-house Smart Card issuance that Henaff spoke of are;-

Gain and maintain Market Leadership: By rapidly releasing new marketing promotions and schemes to stay ahead of competition.

Maintain full control over the entire card issuance operation: controlling inventory levels and issuing urgent, VIP, lost or stolen cards instantly while maintaining quality and industry standards.

Ensure that the security of sensitive data such as customer data and keys (encrypted data) to the bank/applications are kept in a secure environment within the organization.

Protect and Gain Technical Knowledge and Competence within the organization as the bank will not have to rely on a third party's skills.

Long Term cost benefits: though the initial investment on in-house Smart card issuance is higher when compared with low volumes of cards being sourced from a bureau, the overall card issuance cost is greatly reduced especially when card volumes grow.