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Are Smart Cards a Smart Move?

by Staff Writers •
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As the Australian Government moves ahead with its inquiry into identity cards, industry analysts Frost and Sullivan predict that the market for smart cards will surge by 50 per cent in 2006. The total market is expected to reach 11.9 million this year.

While past growth has been predominantly in the telecommunications market (with SIM cards, payphone cards and the like making up just under half the total market with 5.9 million units), the financial sector is expected to dominate the market by 2009, as it migrates towards the Europay-MasterCard-Visa (EMV) standard.

Other markets where smartcards will be adopted include public and private transport, government and health.

Worldwide, the interest in smartcard technologies is driven by several factors, including security against identity theft and web fraud, efficiency of service delivery and user convenience. Smart cards are currently used in Hong Kong and plans for a national ID card in the UK has led to widespread debate, with many concerns about the potential of security breaches and leaks of personal information.

In contrast, the US National Institute of Standards and Technology sees smart cards as the only practical solution to web fraud, and the US Government has already adopted the technology to verify government personnel both on and offline.

It may only be a matter of time before the Australian Government makes the move towards smart cards. In late December 2005, the federal government released the draft Australian Government Smartcard Framework, which will provide guidelines to agencies looking to implement smart card technology.

The government is now seeking consultation from interested stakeholders (which can be submitted up until 28 February).

The Australian Government Smartcard Framework will be aligned closely with the Australian Government e-Authentication Framework for Individuals (AGAF(I)), which will deal with how government agencies verify the identity of people when they interact with government online.

All this comes at a time when smart cards are being touted as the key to revolutionising government service delivery – from healthcare, to taxation to fraud protection.

Just this week, The Australian reported that the government wants to scrap the traditional Medicare card in favour of a smart card, with a view to reducing fraud and improved service delivery for Medicare claims, childcare rebates, pharmaceutical benefits and other services. The cards, incorporating smart chip technology and a photograph of the bearer, would replace up to 26 government services- and concession-cards, including Medicare cards.

Human Services Minister Joe Hockey believes smart cards would reduce fraud and save about 4 per cent of the $92 billion paid out annually to pensioners and others by the Human Services Department.

Discussions are now underway between Human Services and the banks on a way to make these smart cards readable through the existing infrastructure so benefits, refunds and payments can be processed through the thousands of standard EFTPOS readers around Australia.

Part of the challenge seems to be that smart card technology is a work in progress. While the financial sector, for example, has begun to embrace smart cards, replacing old EFTPOS terminals with new devices that read cards with both microchips and magnetic stripes, all but one (ANZ Bank) has switched on its smart card reading capacity.

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