The new cards combine debit, credit and pre-paid facilities by using a microchip in place of the traditional magnetic strip. Anne L Cobb, president of Visa Central and Eastern Europe, Middle East and Africa, said the deal fulfilled Visas vision of the future of card payment products
Chip-based cards would replace paper-based and magnetic strip-based cash systems within 20 years, she said.
South African banks were very much in the lead in developing this technology for debit and credit services. FNB and Nedcor have issued more than 200,000 multi-function cards, under their own brands, since the South African industry agreed on an inter-bank standard for smart cards in October, 1995.
These cards will now be branded with Visa, and will be converted to international EMV, Europay-Mastercard-Visa standards by the end of next year.
A common standard for card transactions in South Africa had been adopted later than in many developed countries, but was already close to the international EMV standards agreed earlier this year.
The South African variant would allow customers access to multiple accounts at their financial institution, said Cobb. In time, the cards would also be used to encourage loyalty programmes and to store personal information.
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The Visa branding is expected to raise use of multi-function cards. Gail Kelly, general manager of Nedcor card services, said the two banks would invest Rand 5billion-Rand 7 billion (pound651 million- pound912 million) in upgrading technology at retail points and banking machines with the aim of issuing 1 million new cards within a year.
In June, Visa acquired the rights to the Universal Electronic Payments System, a software package used by South African banks to manage inter-bank cashflows.
The group was working with the two South African banks to implement the future platform for global inter-operability, said Cobb.
South African banks have pioneered chip-based cards because of the countrys poor telecommunications infrastructure and an over-reliance on cash in a society riddled with violent crime.
It was initially devised by South African brewers as a safer and more efficient alternative to cash on delivery. Less than 30 per cent of credit card transactions are authorised on-line because of telecommunications problems.
However, a microprocessor and memory chip embedded in the new cards keeps track of clients spending, reducing the banks risk in card transactions.
This would make formal banking services more widely available to low income groups, said Viv Bartlett, FNB managing director.