FIME is a consulting and market integration services provider for secure chip based applications, tokens and devices within the telecom, e-payment, transport, e-identity and logistics sectors.
Prakash Sambandam, managing director of FIME India, recently spoke to Dilin Anand of EFY about cards, near-field communication (NFC) and the challenges faced in India
JULY 2012: How big is the market for chip card technology in India?
The smart card sector in India is constantly growing, with many projects related to the universal integrated circuit card or the next-generation SIM card. NFC and contactless technologies are the areas of increased interest here. The majority of these projects come from government initiatives like e-passports, e-identity cards and e-licences for drivers, public distribution system, National Rural Employment Guarantee Scheme, as well as the private sector, in particular for the development of banking applications.
The Reserve Bank of India (RBI) has recently mandated banks to move to EMV—a global standard for credit and debit payment cards based on chip card technology. The resulting migration to chip and personal identification number (PIN) may include the use of contactless and mobile payments. These advancements are rapidly progressing, requiring the local stakeholders to respond quickly to new concepts and processes. Aligning to industry standards and validating products are the keys to providing market assurances and inspiring confidence.
What are the challenges in migrating to EMV?
India does not have a high rate of card fraud. Therefore the migration to EMV was not seen as a priority. Implementing EMV requires a lot of upgrades to existing infrastructure, for example, back-end systems and point-of-sale terminals. The changes required are both costly and time consuming, making it difficult to justify the investments needed against the low rate of card fraud in India.
Now that the rest of the world is moving or has already made the move to EMV, India is becoming increasingly vulnerable to card fraud. So it is only natural that RBI migrates to EMV in order to create a more secure payment landscape in India.
What are the challenges in implementing NFC in India?
The primary challenge in implementing NFC in India is interoperability and getting the different industry players to work together. Mobile service providers, transport operators and banking systems need to converge their efforts regardless of their different business objectives, for example. To achieve an interoperable and sustainable contactless and NFC ecosystem, a market must be stable and based on proven and trusted standards.
What are the different security technologies used in the payment industry?
There are different technologies but EMVCo is the de facto standard. EMVCo is the EMV standards body collectively owned by American Express, JCB, MasterCard and Visa.
What makes NFC more secure?
First, NFC transactions are low-value payment transactions. So it is a security risk that the banks are willing to take for the sake of convenience. For example, today, you cannot make a 10,000-rupees NFC payment. You would only be able to pay for tokens, parking and similar small things.
Second, there have been several pilot schemes and trials from which a lot has been learnt. So the technology is now more mature and secure.
It is important to recognise that nothing is 100 per cent secure, 100 per cent of the time, and security provision should always aim to be one step ahead of the hackers. Even when a technology such as NFC is deployed, it is important that security measures continue to be assessed and security elements are added wherever necessary to protect customers. To achieve this, during the R&D stage technology developers should engage with testing and evaluation consultancies such as FIME. This will ensure from the start that solutions align to the latest requirements, saving significant time and money.
Do you consider NFC to be a disruptive technology?
I personally believe that NFC will not replace cards completely just yet. India consists of more cash-happy people and we are only just getting comfortable with cards. It is important to first establish NFC as a secure technology before it is adopted by consumers in India.
Contact cards will continue to exist in India for a while alongside newer technologies such as NFC and contactless cards.
What is the technical challenge in testing NFC technology?
One challenge faced is handset reception. The antenna on an NFC-enabled handset can impact the NFC connection. This is a challenge for handset developers as the antenna on a conventional reader is different from that on a mobile device.
Given the size of the handset and the communication that takes place between the phone and its mobile network, specific radio frequency (RF) experience is required to implement NFC capabilities within a handset. This is a challenge for mobile handset manufacturers, who are often newcomers to the contactless market and need to design specific RF antennae for NFC mobile devices.
There has been a case where we had to tell the handset manufacturer that their antenna was positioned the wrong way. The only way to overcome challenges like this is rigorous testing of handsets from the beginning and throughout the development process.