Development of national payment system to boost cad business in Azerbaijan

Development of national payment system to boost cad business in Azerbaijan
# 20 June 2007 16:24 (UTC +04:00)
A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles on a band of magnetic material on the card. The magnetic stripe, sometimes called a magstripe, is read by physical contact and swiping past a reading head.
Magstripes following these specifications can typically be read by most point-of-sale hardware, which are simply generic general-purpose computers that can be programmed to perform specific tasks. Nowadays, magnetic stripe cards are not safe and are gradually replaced by chip cards.
A chip card is a plastic payment card with an embedded micro computer chip. The chip securely stores encrypted confidential information such as the cardholder’s account number and Personal Identification Number (PIN). A chip enables the card to hold and update multiple applications and data securely, perform calculations and make independent decisions such as approving or declining transactions.
People feel more secure using chip cards and PINs versus magnetic stripe cards today.
Chip cards are difficult and expensive to copy and copied cards are more easily identified when an authorization is attempted. Chip cards can virtually eliminate skimming fraud (copying the contents of the magnetic stripe onto another card). The use of PIN for cardholder verification combined with the fact that the chip is virtually impossible to copy significantly reduces chargebacks and fraud. That is why the world is migrating to chip.
Azericard Processing Center said Azerbaijan’s card issuer banks are on the way of transition to chip cards. As of May 1, there are 1.7 million plastic card holders in Azerbaijan, of which about 40% are Visa International and 35% are MasterCard products.
15 banks are members of Visa and 12 banks are members of MasterCard. Unlike magnetic cards used in international transactions, chip cards are used in local market in the country.
Establishment and development of national payment system will bring more profit to banks in Azerbaijan because transition to card-based settlement system will encourage trade facilities to convert to this system and reduce commission. In the developed countries about 75-80% of funds are put in banks and 20-25% is cash but the situation is upside down in the developing countries and emerging economies. /APA-Economics/