This development, according to MasterCard, augurs well for the Philippines since smart cards are more intelligent, secure, and capable of multi-applications.

"There is now an increasing number of merchants that can process chip transactions here, although there are not as many ATMs that can do this process," said David Chen, vice president for Asia Pacific of MasterCard, during a recent roadshow promoting the adoption of smart cards in the country.

MasterCard currently has 12 member banks in the Philippines which issue various types of cards bearing the MasterCard name. To date, MasterCard has issued about 62 million chip cards in Asia Pacific.

As early as 1994, a group called EMV — an acronym for Europay, MasterCard, and Visa — was formed to enable merchants to utilize terminals at point-of-sale to support any smart card regardless of the issuer or brand.

A smart card is very much like the ordinary credit except that it has a chip embedded in it. Aside from storing much more information than a magnetic strip card, the chip also holds the information in an encrypted form.

But more than this, according to Chen, the chip allows financial institutions to offer applications to customers that would sharply differentiate their offerings to cardholders.

And since the smart card is based on an open operating system, it can take in as many applications as possible such as loyalty programs, high-security identification and access control, transportation payments, healthcare information, and more.

Furthermore, Chen said, the smart chip makes Internet purchases more secure through multiple password requirements unlike today’s scenario where the card number is the only thing required to buy online.

Also, the introduction of the chip technology would allow MasterCard to offer contactless payments. In fact, it has rolled out globally its PayPass contactless payment system.

MasterCard, the official added, is able to do this because of its collaboration with Multos Consortium which provided the open platform in which multiple applications can run on the chip.

Tim France-Massey, business development director for Multos (short for multiapplication smart card operating system), said they continuously update their applications which card users can download from the Internet.

"The biggest argument for the adoption of smart card is the Internet. With a chip imbedded in their cards, they can get all the applications that their card can hold from the Internet," said FranceMassey.

MasterCard chose to take this strategy to give consumers the freedom to pick the applications that they want instead of preloading them into the chip, said MasterCard Philippines country manager Jose Rene Villa-Real.

"We all differ in our needs so it does not make sense to put these applications all at once," said Villa-Real, who refused to make a timetable as to when smart cards would obliterate the still prevalent magnetic stripe type in the country.

"Although there are still some hardware issues, particularly in ATMs, a growing number of establishments are already capable of accepting smart card payments. But technology changes so fast that perhaps in the very near future, the smart card will already become he dominant form of card type," he said.