Local company picked for chip upgrade

  • 2001-10-04
  • Tassos Coulaloglou
VILNIUS - Credit card giant Visa recently chose the Lithuanian software firm Penki Konitentai to assist in the global switch from magnetic strips to chips in all its credit cards.

Penki Kontinentai, which also has a branch in Riga, is currently serving over 60 banks in more than 10 Central and Eastern European countries, which is part of the reason it was picked.

Visa had been searching for companies to provide local banks with high-level consulting and other services to aid in the early stages of the switch, which was begun in early 1998.

The early measures, including switching basic hardware at ATM machines, were performed by banks.

Prasas Griskevicius, director of Penki Kontinentai's Vilnius office, said that his company is working on a pilot project to develop the software that goes into the chips. Future projects could also include installing new hardware and software upgrades for ATM machines at the request of banks.

MasterCard and Visa have teamed up to produce a worldwide standard called EMV, European MasterCard Visa, which will help combat fraudulent use of credit cards.

Today Visa pays for all fraudulent purchases made by using its credit cards, but after 2005, when the new system should be in effect, Visa will no longer pay for fraudulent transactions made with magnetic strip cards.

The reason for Visa's confidence in the new chip system is the technology involved. According to Griskevicius, "With a magnetic strip all the information is essentially open and you can copy it – the number is readable on the card. With the new chip card, the information is stored in a microcomputer in the chip."

The chip card is also cheaper for store owners. It will not be necessary to dial banks to check if a buyer has sufficient funds. Money can be stored on the card by entering only the personal identification number necessary.

Griskevicius also added that the new chip card system, the microcomputer within the chip also allows for future upgrades. It will be in this area that Penki Kontinentai may have even greater responsibilities. As for now they will be consulting and providing solutions to Visa member banks on how to convert their systems.

Local bank customers should begin to see changes beginning in October 2002. Eastern and Central Europe should be fully integrated with the new chip cards by 2005.