The UK's largest smart card initiative developed to date is to be rolled out next year with the new Chip and Pin credit and debit card project. This push to replace all magnetic stripe credit and debit cards with the inherently (for today at least) more secure smart card technology is being driven by the leading financial institutions with the key objective of removing, or at least significantly reducing, common credit card fraud.

However, while following the progress of this gigantic project, it is easy to overlook some of the cleverer technology that is being used to drive the solution forward.

Fraud prevention and cost savings issues will initially drive the justification for Chip and Pin, but simply making use of the new smart cards will be a challenge in itself for most existing card issuers. The old card management systems were not smart card enabled, and therefore could not deal with the processes that are required to manage the new solution. New card application management solutions require the ability to issue, manage and handle the data preparation requirements for smart cards. This means providing a solution that can set up individual user information and systems facilities within the smart card chip. In addition, there are the systems and regulatory requirements that must be handled.

The UK system is intended to be European, MasterCard and Visa (EMV) compliant. From a systems perspective this means that fraud protection is paramount, but must also be balanced against realistic operational risk to deliver an operationally functional solution. EMV systems must be designed to significantly reduce on-line, card-holder-present fraud, and in addition be capable of reducing bad debt. To counterbalance the required additional processing checks, EMV rules dictate that low-value economically manageable payments should be dealt with off-line, with rules and regulations being applied by the card management systems using a combination of card and systems-based processing facilities. Therefore, smart card management systems must be able to provide the ability to define risk profiles at an individual card level, manage and control the updating, as well as handle on-line downloading of cardholder risk information during the card issuance process; all in a real-time transactional environment.

This highlights the fact that the personalization requirements for Chip and Pin systems are significantly different from those of their magnetic stripe predecessors. Card issuers must be able to flexibly manage the economics of their solutions. They must have the facilities to personalize cards and manage both usage and checking at a transaction level. This includes having the ability to deliver on-line provisioning facilities — adding new and changed facilities, and de-provisioning — providing on-line card refusal, transaction blocking services, and the outright permanent blocking of cards.

In this very specific field of smart card management ACI Worldwide is one of the leading suppliers of smart card management technology and, from an analyst's perspective, it was interesting this week to find out first-hand how its technology is being used across the globe. For example, in the Hong Kong ID project, where ACI's role involves the delivery of an integrated software solution to manage the lifecycle of the systems' smart cards, and the individual applications that reside therein, this was achieved using the ACI Smart Chip Manager solution. In addition, there is the new Standard Bank (one of Africa's leading banking groups) implementation of a multi-application smart card solution that in the future will pave the way for customers to receive multi-functional facilities from within the confines of a single smart card.

The true technology benefits from the use of smart cards will come from the multifunctional nature of the technology, and it is good to see that strong supporting technology is already in place to achieve these objectives.