Capital Financiero, a prestigious Panamanian journal dedicated to Economy, Finances and Technology, interviewed in early June the President of Inteligensa, Venanzio Cipollitti, during his visit to the country. They talked about the projects conducted by Inteligensa in Panama, following the recent opening of its trade office in Panama City.
The chip cards, a complex process
In the rest of Central America there is no a legal mandate and each bank goes at its own pace
With more than 800 workers globally, the Inteligensa Group, a company dedicated to the design and manufacture of payments systems and mass products for the identification of people, animals and products, last year opened an office in Panama in order to expand its operations and participate directly in the migration process of the Panamanian banking to smart cards, in addition to create new business in the country.
This company has a production capacity of 16 Million security plastic cards per month and is one of the Top Ten card producers of the world, according to The Nilson Report.
During his recent visit to Panama, Venanzio Cipolliti, President of the Inteligensa Group, talked to “Capital Financiero” about the company plans in the country, the migration process to smart cards and the challenges of the Latin American banking with regard to security.
– ¿How was the beginning of Inteligensa?
I founded Inteligensa 25 years ago and it´s a company dedicated to providing high security cards for banking and also for telecommunications, transport, as well as high security documents, we control the smart card technology for different uses.
Our Corporative Head Quarter is in Miami but the Head Quarter for Central America is in Costa Rica and the last year we opened an office here in Panama.
We also have offices in the Dominican Republic, Venezuela, Colombia, Brazil and Uruguay. We service the whole region and elaborate our cards in our own plants, which are located in Italy, Brazil and Mexico”.
¿What can you tell us about your plans in Panama?
Let´s review what´s happening in Latin America with the cards. The banking cards with magnetic stripe must migrate because the cloning problem is very serious and it means a lot of losses for banks; these losses at the end are forwarded to the customers in the form of higher interest rates and additional costs.
To eliminate the fraud is a primary objective in Central America and to reach that goal it´s necessary to migrate to the chip cards, but that migration is difficult because the banks need to adopt the new technology, not only the plastic cards, but also the new systems.
We are talking about dozens of banks in Panama, therefore, we are here in order to support the banking in this complicated process. And it is not only the card, it´s also the Internet transactions that we have to take care.
As we migrate to the chip cards technology, it is necessary to strengthen the online transactions, because the fraud in transactions with not present cards can grow.
In order to implement the chip system in the cards in Panama, you have to change not only the plastics, but also the POS, including the cash registers for them to read the information in the chip in a safe way.
There is to shielding the online transactions system, which includes the shopping and the bank transactions. The work to be done in Panama is titanic and that is the reason we decided to open an office here”.
¿How do you evaluate the migration process that is carrying the Panamanian banking?
The chip card is a technology created in 1979, which was born when chip cards were being used to replace coins in public phones and that technology was available in the banking at the beginning of 90’s. However, at that time fraud didn´t represented a problem because this was very little. But as the telecommunications began to strengthen and the online risks there had no justifications, it started the boom of these cards.
For the beginning of 2002 it began the targeted use of the chip card in order to combat the fraud.
The two pioneer countries in the migration were Brazil and Mexico and we were present in those processes from the beginning.
As of today, I´d say that in Latin America it must have probably migrated between 50% and 60% of all the cards to the chip technology, the Central American and Caribbean countries and Argentina are still left to migrate.
Each one has adopted the technology to the extent that it feels that the moment has come for the change and also based on the plans of the franchises such as Visa, MasterCard and AMEX”.
¿How is the progress of this process in Central America?
There are always banks that dare to take the first step in the technological change and then the rest of the banks follow those one, because when the first banks begin to issue chip cards, those who have not, start to suffer the negative consequences of fraud and feel the intense necessity to change.
The migration to chip is not only to buy the plastics, it´s necessary to advise the banks on this new technology and at the same time, to personalize these cards, which are tailored to each bank. Then the cards have to be encoded and there are no many encoder centers, but we are here to help you with this process, offering you our card encoder centers which are located in different countries.
I estimate that between 3 to 5 years Central America will have migrated an important part of its card base, but that is difficult and an expensive process for the banks.
The advantage of Panama is that the Superintendency of Banks established the migrations as mandatory and this accelerated the process, but in the rest of Central America there is no a legal mandate and each bank goes at its own pace.
The other countries that are migrating in a fast way are Costa Rica and Guatemala, while El Salvador and Honduras follow a slower process.
¿What other activities has been increasing the use of smart cards?
When we speak about cards, we always think about bank cards, but the world of cards is extremely wide.
A card is a high security identity document, but not only it is necessary to identify people in order to accede to a debit, credit or prepaid account, it must be necessary to identify people in other circumstances, for example, an identity document such as the chip driver license.
We are talking about other security parameters that countries need, such as the passports that keep information of the passenger in a chip.
When we talk about identifying people to a telephone network, it´s used a SIM card, which is fabricated in a credit card format, but with another kind of program.
At the end, cards allow people to be identified in a safe way to different types of networks.
And there are also devices to identify food and animals and we are in different traceability projects in the whole Continent, this is an activity that is taking a very important boom”.
Manuel Luna G.
mluna@capital.com.pa
Capital Financiero
Capital promotes free enterprise, competition, trade liberalization and State modernization, so that is editorially against monopolies, trade barriers and everything that distorts the economic environment and affects the business and macroeconomic performance of each country. Follow us in Twitter @CapitalPanama