Smart cards have emerged as the Chilean banking sector's latest tool to combat fraud. Similar in size to a credit card, a smart card contains an embedded memory chip that holds information about the user. It is much harder to steal information from these cards than from magnetic-strip cards. The country's banks are expected to spend some US$30m on chip-based payment cards by 2010 in an effort to deflect fraud of magnetic-strip cards.
The roll-out of new systems, however, will require an overhaul of current infrastructure--such as the reconfiguration of existing automatic teller machines (ATMs) that only accept magnetic-strip cards. The new smart-card system is being developed and implemented by Etisa, a company founded in 2000 by several of the largest banks in the country--including Banco de Chile, Banco de Credito e Inversiones, Scotiabank Sudamericano, Banco Santander-Chile--and the main telecoms firm, Telefonica CTC Chile. Etisa expects that smart cards will have almost completely replaced magnetic-strip cards in Chile by 2007.
Chileans presently use some 6m magnetic-strip cards to access banking services (not including credit cards). Transbank, a firm that processes credit-card transactions in Chile, has been upgrading its platform for chip payments--some 5,000 of Transbank's 35,000 sales points are now chip-compliant. In an extra boost to the smart-card movement, Chile's public transport system expects to implement smart-card technology by August 2006.