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By Pia Heikkila, 25 September 2000 10:30

NEWS EMV, the worldwide standard set by Europay, MasterCard and Visa in February 1999, requires that credit and debit cards be installed with a chip by 2005. However, installing the smartcard system requires the banks to upgrade their systems. The cost of migration in the UK alone is estimated to be £300m, according to financial consultancy group OSI. Speaking to silicon.com, Adrian Cannon, head of consumer transaction services at OSI, said: "The banks' IT infrastructure will require large investments as smartcard technology is expensive and banks' central processing and clearing systems need to be replaced. Customers will benefit from safer transactions and will see the possible increase in banking charges in return for improved services." Stuart Cliffe, CEO of the National Association of Bank and Insurance Customers, told silicon.com: "Smartcards are good news because of their improved security and functionality, but because of the expensive upgrade, it may not be cost effective from the customers' point of view." Anoop Ubhey, smartcard analyst at research company Frost and Sullivan, warned of the escalating cost of service charges. He said: "Banks are being cautious to move into smartcards because there is a large infrastructure change to be done which will be both costly and time consuming. In the end, it will be the banks' customers who will end up paying for the changes with higher transaction charges." Banks and credit card companies are expected to have completed the backbone EMV migrations by October 2001 and the full implementation of the process by 2005, according to the EMV spokeswoman. Barclays, HSBC, LloydsTSB and Natwest were all unavailable for comment.