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EMV smart cards.

Smart cards, which are the next generation of credit cards, have begun to be introduced around the world, are now proliferating in the Latin American region.

Smart cards contain a small computer chip, which not only gives them greater memory capacity, but improves security for consumers as well. Memory, of course, is the key. Basic personal and payment information can be strongly encoded on the card making it nearly impossible for the unscrupulous to decipher.

The cards add flexibility to the payment process as well. There is room in memory, for example, to allow retailers to reward loyal customers automatically. The cards also extend the range of the credentials it can hold-for example, health club memberships, and, some say, might even be a substitute for a separate driver's license.

The EMV smart cards are the cards that work with systems developed by Europay (the 'E'), Mastercard (the'M') and Visa (the 'V'). It is intended to be a global standard and, surprisingly, it has been around for awhile. The original standard was published in 2002.

According to an April 18, 2006 posting on the Tendencias (Coral Gables, FL USA) website, the central reason for the development and adoption of the EMV smart card was increasing credit card fraud. Adoption was slow in the Latin American region, though, because historically credit card fraud rates in the region have been "among the lowest in the world."

Now, says Tendencias, "While fraud remains low by global standards, the rapid growth of card penetration has pushed up the number of fraudulent incidents by some 15% annually." In the region, Brazil has the highest rate of migration from magnetic strip cards to EMV smart cards with 90 percent of terminals EMV compatible. Fraud has dropped by 80 percent.

Mexico is fast upgrading as well. Tendencias says the country will have 370,000 EMV compatible terminals in place by the end of 2007.

One of the benefits of the delayed implementation of EMV smart cards in Latin America is that the new card come with bigger memories. Most have 32kb of memory and some have as much as 64kb. Earlier EMV smart cards had just 8kb.

This means Latin America's smart cards are smarter. They can hold more complex consumer profiles and run more sophisticated software.

Merchant cross-selling opportunities increase and, "The result is higher transaction volumes per card and increased retail sales."

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Title Annotation:Europay (the 'E'), Mastercard (the'M') and Visa (the 'V')
Publication:Market Latin America
Geographic Code:4EUBL
Date:Aug 1, 2006
Previous Article:Argentine price controls are getting riskier.
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