On the other hand is the Smart (or chip) card which is the latest in payment card technology. This is a plastic card containing a computer chip and enabling the holder to purchase goods and services, enter restricted areas, access medical, financial, or other records, or performs other operations requiring data stored on the chip.

It has a built-in microprocessor and memory used for identification or financial transactions. When inserted into a reader, it transfers data to and from a central computer. It is more secure than a magnetic stripe card and can be programmed to self-destruct if the wrong password is entered too many times. As a financial transaction card, it can be loaded with digital money and used like a travelers check, except that variable amounts of money can be spent until the balance is zero.

In a circular to all banks titled, “Extension of Timeline for Migration from Magnetic stripe to Chip plus PIN/EMV, signed by the Acting director, banking supervision department, Mr. James Olekah, the CBN stated that, “Recall that section l,4.2c of the e-banking guidelines issued in 2003 by the CBN stipulates that “in view of the demonstrated weaknesses in the magnetic strip technology banks should adopt the chip( smart card) as the standard, within five years”. The implication of this is that the timeline given to card issuers in the guidelines had expired as at the end of August, 2008. However, after due considerations of the concerns from the market and other stakeholders,

The National Payments System Committee agree to extend the deadline for the migration to Chip+PIN technology to April 1, 2009. You are by this circular required to cease the issuance of new magnetic strip cards with effect from April 1, 2009. However, previously issued magnetic should be withdrawn on expiration of the cards and not as at April 1, 2009. Please note that no new extension of the time would be granted, while failure to comply with this directive will attract severe sanctions which would include imposition of financial penalty and withdrawal of approvals.”

It would be recalled that recently, in anticipation of the directive of the CBN on Chip Cards, InterSwitch,Nigeria’s premier payment transactions switching company, introduced Verve card, a pan-African innovative chip and PIN (Personal Identification Number), EMV compliant payment card.

According to Mr. Mitchell Elegbe, Managing Director/CEO of InterSwitch, who spoke to journalists at the media launch of Verve card, the expected change from magnetic strip cards to chip & PIN platform, is what necessitated the release of Verve card into the financial market.

Elegbe said CBN’s directive was made in the best interest of banks, merchants and cardholders because existing magnetic stripe cards have minimal storage space, cannot store applications, offer little flexibility for new product development, are easy to duplicate and offer minimal security features.
With the release of Verve card, which can be used on mobile,

ATMs, PoS, Web and the Internet, Nigerian banks are expected to begin the conversion of 28 million cards in circulation to the chip & PIN platform since major payment card schemes in Europe, Middle East, South America and Africa have converted their cards to the secured smartcard platform.

However, Verve card on other hand is secured with integrated circuit chip (ICC) and can carry enhanced data. The ‘chip’ part refers to the
smart card-a plastic payment card with an embedded microp pocessor, which contains the same information as a magnetic stripe but it has additional processing capabilities and a secure memory. In developing the Verve card, Mastercard MChip 4 technology was adopted. The card has bigger storage capacity, offline PIN verification and can perform cryptographic calculations.

”The microprocessor can hold multiple applications where an application may be a specific brand of credit card, loyalty card, gift card, staff discount card, etc; so a cardholder could have credit and debit applications, loyalty applications and electronic ticketing on a single physical card”, Elegbe explained.

Specifically, Elegbe informed that Verve cards can hold information securely and is difficult to copy or alter. The security and EMV features in Verve card guarantees a higher level of security for payment transactions than magnetic stripe cards. Interswitch has also initiated eight other security initiatives; MoneyGuard (which allows cardholders send an sms from their phones to block their cards should they suspect any unusual activities), Fraud Watch (a portal and email for fraud reporting and information management, Fraud Guard ( a fraud management and transaction security system), Fraud Insure (card fraud Insurance), Fraud Team (Risk Management team), Identity Guard (Token based strong authentication), Fraud Aware (Cardholder Awareness Campaign) and Data Guard (EMV Mchip 4).