New ‘chip’ on the block

We noticed it even before we entered the city, after a 45-minute traffic-free drive from the Chiang Kai Shek airport. It stood like a giant in the late afternoon haze, towering over all the other tall buildings around it. Later, we learned that it is the tallest building in the world. With 101 floors above ground, Taipei 101 at the heart of the New Taipei is Taiwan’s not-too-subtle declaration that hey, here we are, poised to rocket forward in the 21st century.

We were billeted right next door, at the 25-storey Grand Hyatt Taipei, together with other media representatives from the Asia-Pacific region, as well as top regional MasterCard executives and card vendors, and representatives of customer financial institutions and banks. What brought us here was the MasterCard Asia-Pacific OneSmart and PayPass Conference and Technology Fair, where the latest card technology was showcased and best practices were shared. Held from July 12 to 13 at the Grand Ballroom of the Grand Hyatt Taipei, said to be the biggest Hyatt in Asia, the impressive setting was a perfect match for the auspicious event.

It is said that money, as a medium of exchange, is "one of the most important inventions of humankind." It has taken many forms, from salt to seashells to gold and silver, to paper and coins. The plastic card with the magnetic stripe revolutionized the payment industry in the second half of the 20th century. Now, at the dawn of the 21st century, the chip-based smart card ushers another surge in the practical application of modern technological innovations.

The "smart card" looks very much like the credit or debit cards that we are more familiar with, except that it has a micro chip embedded in its card face. The chip can store much more information than a magnetic stripe so that it offers more applications than the standard card. The smart card’s increased memory makes it possible to have a single card serve as credit, debit, and ATM as well as stored value cards, all-in-one. No need for bulging pocketbooks that hold several cards for different applications. The smart card can be used not only for making payments but it can also store personal data such as passport details, driver’s license, and medical histories. The card holder can track his loyalty points easily, while card issuers can offer instant rewards. It can even be used as a hotel room key. The smart card also provides heightened security, thus significantly reducing the risk of fraud.

One of the compelling reasons for the shift from the magnetic stripe to chip is the serious concern over credit card fraud and security, particularly in places such as Malaysia and Taiwan. "As proven by market migration in Malaysia, smart cards are capable of providing greater protection against fraud," noted Shuan Ghaidan, MasterCard vice president and regional head for advanced payment systems in the Asia-Pacific region. "However, they are also a platform for issuing banks to develop highly differentiated products and more value-added services for their customers."

At the conference in Taipei, MasterCard announced that at the end of June 2005, it had more than 38 million MasterCard branded smart cards in the Asia-Pacific region, one of the fastest growing regions in the world. Over 95 percent of the cards are EMV-compliant. EMV stands for the Europay-MasterCard-Visa consortium which dictates the industry standard that ensures the interoperability of all debit and credit smart card transactions worldwide. The common standard has made it easier for the migration from magnetic stripe to chip. Majority are true multi-application cards.

Under the banner of OneSmart MasterCard, all of MasterCard’s smart card solutions, technical expertise, and marketing support have been consolidated. MasterCard International is widely recognized as a knowledge leader that has devoted extensive resources to developing a deeper understanding of the payment card markets. MasterCard is the market leader in smart cards, with over 189 million MasterCard-branded smart cards globally.

The OneSmart PayPass is another innovative payment solution that provides the consumer with "the simpler way to pay." It is an alternative to cash payments that combines the power and security of the MasterCard chip with the speed and convenience provided by "contactless" payments. With a secure chip and a copper wire radio antenna embedded inside each card, all the consumer needs to do is simply "tap" his MasterCard PayPass card on specially equipped merchant terminals, thus eliminating the need to swipe a card through a reader, or fish for cash and coins from one’s purse or pocket. This is ideal in places where speed is essential such as retail and fast food outlets, movie houses, parking lots and toll gates. In Taiwan, MasterCard won the bid for the world’s first transport/retail EMV PayPass card to be used in the Kaoshiung City Government (KCG) transportation project for southern Taiwan.

With the OneSmart PayPass, the security factor is also reinforced since the card never leaves the hands of its owner. You do not even have to remove it from your wallet. At their exhibit at the MasterCard technology fair at the Grand Ballroom of the Grand Hyatt Taipei, Ingenico senior regional manager for business development, Faleena Abdul Gani, demonstrated the use of a MasterCard PayPass card on a specially equipped portable merchant terminal in a mock-up restaurant setting. Now you won’t have to worry about having your card "skimmed" unscrupulously when you have to give your card to pay a bill, since your card never changes hands.

PayPass is also suited for the payment of small-ticket items so you don’t get the sometimes annoying request to increase your purchase to meet a minimum in order to be able to use your card. Most people nowadays carry less cash in their pockets. In the US, nearly 40 percent of adults carry less cash with them compared to five years ago, and 49 percent of those surveyed had $20 or less in their wallets. Fifty-seven percent of consumer payments are still conducted with cash or checks, but the trend is towards cashless payments. The MasterCard PayPass card provides a convenient solution and is expected to revolutionize small cash purchases. Nonetheless, it is not intended to replace credit cards which are more often used for big- ticket items.

In the Philippines, only five percent of the total market are cardholders. "We have a huge opportunity for growth," Anton Corro, MasterCard International director for operations and member relations in the Philippines, remarked during the dinner he hosted for the party from the Philippines at the ritzy Shanghai Court of the Grand Hyatt Taipei. But, as Shuan Ghaidan pointed out during our interview, you don’t need to have a highly developed market to be able to take advantage of technological innovations such as the MasterCard PayPass. A non-traditional approach would be more suited in a country like the Philippines and he noted the innovative spirit exhibited by the Bank of the Philippine Islands with its orientation towards the chip and "contactless" technology.

In December 2004, the Bank of the Philippine Islands (BPI) rolled out its pilot of the MasterCard PayPass, the first in Southeast Asia. BPI card banking division vice president Kay de la Paz disclosed that 250 existing cardholders were issued PayPass cards that they can use in the establishments of 20 participating merchants in the Makati central business district such as Burger King, Figaro, Seattle’s Best, and Mrs. Fields, among others. At the awards dinner on the last night of the convention, the Bank of the Philippine Islands was given the MasterCard Asia-Pacific OneSmart PayPass Partner platinum award for 2005.

The first five floors of Taipei 101 are occupied by a retail mall with shops carrying mostly high-end designer brands, the likes of Gucci, Escada, Dior, Cartier, Prada, Bulgari, Miu Miu, Ralph Lauren, Lagerfeld, and Jean Paul Gaultier. It reminded us of our own Greenbelt 4, except that they covered several stories and the people looked like they were not only browsing but were actually shopping, perhaps even using MasterCard credit cards. There is also a food court as well as restaurants, among them, the very tony Diamond Tony’s Italian Restaurant where MasterCard hosted a dinner for the media and exhibitors on the first night of the convention. From the main floor, an elevator can take you to the observation area on the 89th floor within 39 seconds. Taipei 101 is said to be the most technologically advanced building constructed to date, equipped to withstand strong winds, earthquakes, and typhoons which often visit the country. On our return trip to the airport, we took one last look at this tall building that seemed to reach out towards the morning sun, like a metaphor of what we had just witnessed at the MasterCard convention, a portent of the future and brighter things to come.