Visa smart-card hardware ready, but software isn't

Visa International Inc. last week announced that the development of hardware needed for point-of-sale (POS) systems to read the embedded chip technology in its smart cards has been completed. However, the terminal software needed to read the cards won't be available until late this year.

Currently, only Foster City, Calif.-based Visa and New York-based American Express Co. are moving forward with smart cards as an alternative to credit cards.

Unlike traditional credit cards, smart cards use an embedded chip that can be programmed to accept, store and send data and is better able to stop card cloning and forgery.

When the terminal software becomes available, several key merchant payment processors will be able to offer smart-card acceptance applications on Hypercom Corp. and VeriFone Inc. terminal models. Those payment processors include Tempe, Ariz.-based Vital Processing Services and Englewood, Colo.-based First Data Merchant Services Corp.

Visa is betting that about 40 percent of brick-and-mortar merchants will replace their POS devices during the next four years because of outdated technology, officials said.

Theodore Iacobuzio, a senior analyst at TowerGroup, a research and consulting firm in Needham, Mass., said consumers will be quick to welcome smart cards, once the technology is distributed among retailers. The sticking point until now has been that merchants will have to "foot the bill for any chip card rollout," said Iacobuzio.

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