Chip & Pin Solution from Intellect Cards

Executive Summary

Globally the challenge to fight against fraud, committed by fraudsters on magnetic stripe based payment brand cards, was dependant on many factors till few years ago. The cost, the willingness to adapt to new technology, the knowledge to migrate to smart card based payment solution and above all the time to market were baffling the banks and vendors around the world. Moreover, the Apex banks in many countries supported financial institutions against this change for various market specific reasons including economic related cause.

But the drop in technology infrastructure costs, the increase in fraud committed by many counterfeit cards, produced from genuine magnetic stripe track data, has forced many banks to migrate to chip based solution from the existing magnetic stripe cards. Banks and Financial institutions in European region showed the world the willingness and demonstrated exceptional discipline over years to issue smart cards of various schemes. While banks top management has been successful in handling the
resistance factor within the technology and project teams,many financial institutions face challenges in identifying the correct technology, while complying to EMV standards in order to implement Chip and Pin based smart card products. Implementation with simple SDA based Card authentication methods prove inadequate and will force financial institution to go for changes again within the short time of implementing smart card solutions, once they realize the importance and sensitivity of secured CDA based Card authentication methods.

This white paper is aimed at discussing the business challenges of EMV compliance,mandated by EMV co and various payment brands (schemes) for the debit & credit cards issued by banks in general and the powerful business and technology solution offered by Intellect Cards management system in particular.

It is assumed that the reader of this white paper is reasonably familiar with smart card technology and EMV compliance mandates.

Business Challenge

Many challenges in chip migration still exist for banks. Specifically the smaller and medium sized banks still face a huge challenge when it comes to migrating magnetic stripe cards to chip based smart cards with compliance to stringent mandates expected by EMV co. The problem compounds when many bankers and operation executives realize that there is a paradigm shift required in many dimensions viz. technology, vendor skills, core application or card management system,middle ware like switch or POS controllers, Point of sale machines etc. Above all customer education about replacing signature with PIN for a transaction originating from a normal POS machine requires concentrated effort.

While any problem with any kind of intensity can be tackled, the challenge of interoperability issues is a cause of concern for many stakeholders and therefore a concentrated effort is required to manage the smart card migration project both from the bank and vendor side.

The key challenges for a financial institution, depending on the issuing or acquiring business, has the following tasks to start with among other concerns.

1. Identify the right technology within the chip based solution. Example Crypto co-processor is required for CDA (Combined Dynamic Data Authentication – Application Cryptogram Generation) and is more secured as compared to DDA/SDA based authentication technology. However the cost plays amajor role.

2. Identify skilled personalisation bureau with devices. They are responsible to produce the smart card without any personalisation errors and go for certification of the same with schemes.

3. The core card management system to handle smart card, card production related data objects, handle authorisation with enhanced chip data elements capture and analyse the offline transaction results to make a meaningful and risk free decisions and manage enhanced clearing functions.Analyse and understand the liability shift during charge back process.

4. Upgrade middle ware like switches and pos controllers wherever applicable to manage the chip data elements capture

5. Upgrade point of sale terminals and ATMs to handle EMV compliant transaction.

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