Innovation Profile AmaTech:Anyone who has received a new style Visa Debit card from their bank will probably have noticed a new feature on it – a contactless payment facility. This allows low-value transactions – less than €15 in Ireland – to be conducted simply by passing the card over a machine reader.
There is no need to insert the card into a reader or even touch the reader with the card and no PIN is required. It’s quick and easy and makes things a lot more convenient both for cardholders and retailers.
This new payment mechanism is enabled by a microchip and antenna embedded inside the card itself. The chip and antenna receive power transmitted by the machine reader and they transmit the information required for the payment back to it.
Passport technology
This is the same technology now in use in passports worldwide. Those queues at passport control in Dublin Airport could soon be a thing of the past if the hardware to read passports electronically is installed.
This would allow everyone with a modern passport simply to wave it over a reader with all their information appearing on screen in front of the person at the checkpoint. No need to hand a passport over for a person to scan it or physically read it again, making the process a lot quicker and easier.
But there are some drawbacks to the new technology, and Irish company AmaTech is at the forefront of developing solutions to them. These issues include difficulties encountered with the actual insertion of the electronic components into the cards or documents, and problems with the connection between the chip and the antenna.
“Our founder and chief executive David Finn has written over 50 patents in this area and wrote the original patent for electronic card inlays back in the 1990s,” says AmaTech financial controller Mark Rafferty.
“The company is structured around his background and we have two divisions – an inlay production facility in Galway which develops and manufactures products for the electronic inlay industry and a machine engineering business in the Bavarian Alps which offers proprietary engineering expertise for production platform development for the industry.”
The German division is very important as it means that the company has the capacity to design and develop the machinery required to manufacture and implement its own inventions and innovations. “Research and development are at the core of the company,” says Rafferty.
“Having the two divisions means we can work with the production and machine engineering guys at the same time. For example, if a new bank card comes out with a new type of electronic inlay inside it our engineering group can look at that to design the machine required to manufacture it. This is important to the industry which wants to be able to manufacture the cards as efficiently as possible.”
Where AmaTech really scores is its innovative technology for the new contactless payment cards. As Rafferty explains, the new cards incorporate a wire antenna that runs around the card near its edge and is connected to the chip which contains all of the payment and account information.
Normal usage, however, presents certain difficulties for this arrangement.
“Modern cards are dual interface cards,” he points out. “They have the traditional chip and PIN payment system where you put the card into the reader and enter your PIN.
“They also have RFID [radio frequency identifier] technology built in to allow for contactless payment. Contactless payment doesn’t require a PIN and just involves the cardholder passing it over or near a reader. This speeds up transactions enormously. It has been estimated that a standard chip and PIN payment takes about 40 seconds to execute but a contactless payment takes about 15.”
This is very important for businesses with high volumes of relatively low-value transactions and the new technology is already in widespread use in popular fast-food chains and coffee shops in the US. It is also gaining in popularity in Europe and many Irish retailers are installing the technology.
The problem with normal usage is the way people use the cards. “They put the cards in wallets where they get bent and putting them in ATMs and so on causes wear and tear as well,” Rafferty explains. “Over time this can break the connection between the antenna and the chip and this means the contactless payments function will no longer operate and people will have to replace cards with all the inconvenience and expense that causes. We have enhanced the quality and reliability of cards with our reactive coupling technology which removes the need to interconnect the outer antenna with the chip. This means that the cards are much better able to withstand the stresses of normal usage.”
And the potential market for this new technology is truly massive with growth being driven not just by the technical innovation of contactless payments but by changes to the actual payments system itself.
Liability change
Rafferty points out that a major liability change is due to occur in the US in October 2015. This will fundamentally change the status of old-style magnetic stripe cards. Currently, if any card – chip and PIN or magnetic stripe only – is physically used for payment at a retail outlet and the payment subsequently turns out to have been fraudulent the card issuer is liable for the loss. The cardholder and the retailer bear no liability.
From October 2015, however, the retailer will be liable for losses on magnetic stripe cards. This will create a marked reluctance among retailers to accept anything but smart cards for cashless payments. Similar changes are expected to follow around the world and this is driving the rapid replacement of the hundreds of millions of cards in issue globally.
For the electronic financial markets alone, US market research and analysis firm Frost Sullivan estimates that the number of electronic inlays being issued per annum for use in payment cards will grow from about 180 million in 2010 to more than 1.3 billion in 2020. In the passport market the International Civil Aviation Organisation (ICAO), which is responsible for regulating passport use globally, envisages that all ICAO-compliant passports will be using this technology by 2020 – that’s a market of billions of passport holders around the world.
IMS Research forecasts concur. These put the number of financial payment cards in use around the world at roughly 11 billion by 2017 with about half of them smart cards. By that stage, one in every three new cards issued will incorporate contactless technology.
Rafferty says the company expects to be in full production at its Spiddal, Co Galway, base in 2013. “All of the main card issuers in the world will be our major customers. We also work with the card companies to resolve problems they might be experiencing in the manufacturing process. Our sales team have all been in the industry for a long time and know what the issues are and we have already got some very interesting projects to work on from the industry. Another major market for us is likely to be national ID cards.
“When these come in they will replace passports across the European Union and they will have to have the contactless technology. And the passport sector itself will be a major growth area – all 193 ICOA members will have to have compliant passports by 2020 and that means having a chip inlaid in them and our technology is already in use for that.”
