Desjardins hires outside help for smart card transition

Dejardins Group said Monday it has signed GFI Solutions to a three-year contract to help it make the transition from magnetic stripes to smart chips for its debit and credit


Dejardins said earlier this year that it was the first Canadian financial institution to set the wheels in motion. All Canadian banks and card-issuing institutions will eventually make the move and we could see smart cards as early as 2007.

The international standard for smart cards is called EMV, which was founded in 1999 by Europay, MasterCard and Visa. Europe was the first to adopt the standard with France and the U.K. just finishing up their transition to chips on cards.

“It’s going to be a step-by-step project,” said Jean-Francois Merette, deputy head of ATM and POS for Dejardins.

“First of all, we will make sure that we have the technology to respond to the new features of EMV. Then we go through the applications . . . to make sure our application solutions are developed to support EMV. Like any other financial institution, we have to renew our base of equipment once in a while.”

There are approximately 600,000 payment terminals in Canada retailers and 40 to 50 million credit and debit cards. All of them will eventually be equipped to deal with smart card technology.

Dejardins operates 2,800 ATMs in Quebec and 300 outside the province, which will all be upgraded.

“Every country that faces the EMV migration has this problem. Everything in the payment system has to be rebuilt,” said Alain Philippe, vice-president transactional services for GFI.

“It’s a very large project. In fact, it was the largest IT project in Europe in 2002.”

Financial details of the contract with Montreal-based GFI were not disclosed, but according to GFI it is worth “multiple millions.”

The company will provide consulting and support for Dejardins through the transition phase and also helping the institution educate retailers and card holders how the change will affect them. The biggest adjustment for the latter will be switching from signatures to authorize credit card payments to entering a PIN.

Education may be the biggest issue for the bank, said Merette.

“I think it’s going to be a big challenge,” he said. “Where we’re going to have put more emphasis is the way we’re going to follow-up on support for customers. Equipment is equipment . . . but it’s changing the way you’re doing the transaction.”

Merette said it’s too early to comment on the kinds of features that consumers will see in smart cards, but they could include vendor-specific loyalty programs built right into the chip. According to the Interac Association, the cards could also be used for micropayments – a fixed amount for small purchases.

GFI may bring in staff from its office in France to help out Dejardins since they have experience with the European EMV rollouts in France and the U.K.

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