Only four forms of payment - barter, cash, checks and credit cards - have been used in the last five thousand years, but South Africa (and the rest of the world) is expected to benefit greatly from chip-based bank cards and EMV technology (Europay MasterCard Visa).

EMV, in addition to current security measures, places a smart chip on bank cards and requires transactions to be verified by a pin-code (i.e. something you have and something you know).

This is according to Absa group payment systems GM, Walter Volker, who last week outlined the importance of migration to EMV-based payment systems from current check and magstrip-cased cards.

"There has not been a real quantum leap in payment technology, but magstrip has reached the end of its viability cycle, and migration to chip-based cards is seen as both a strategic and tactical move," he says.

Absa claims that there are a number of benefits, which span the value chain from merchant through bank to end-user, most notably the security features, and the ability to place applications such as loyalty programs and offline approvals on the card.

Rural banking could also be given a boost with offline transaction approvals, Absa says.

"The bill for transitioning to EMV is in the trillions worldwide, and we estimate that it will cost SA banks and the card companies, such as Visa and MasterCard, around Rand 1 billion to upgrade their systems," Volker says.

He adds that the migration is no simple task, with many banking systems having to be ?re-done?, and ATMs and POS systems needing upgrades even before the issuance of cards begins.

Over the next ten years, Volker says, the banks will be issuing hybrid cards, using EMV and magstrip (as a back-up) because there may be instances where terminals will not be fully EMV-compliant.

Not all SA banks are on schedule with their EMV roll-outs, despite two deadlines having passed already, says Volker, who also chairs the local arm of the EMV Forum.

Althea Bacchialoni, BMI-T principal analyst, says that EMV got a lot of press last year, but the hype came and went.

"Each bank is sitting still, watching what the others are going to do with EMV, but we have seen that Absa and Standard Bank are the furthest along in implementing the technology, with staff pilots already underway," she says. The benefits, she claims, are undeniable, with a pilot in France showing a 90 percent reduction in domestic card fraud.

BMI-T estimates that the total local bill for EMV migration will be closer to Rand 2 billion, however, which will be covered by the banks over the next ten years.

"Both the banks and merchants believe that the benefits of EMV will justify this spend, though," Bacchialoni comments.

While the process in SA is slower than the rest of the world, fraud reduction and security features are driving the adoption of EMV, more than multi-applications.

The challenge for the banks and associations now, is to help create a higher level of awareness at both consumer and merchant levels.