Magazine Article | April 1, 1998

Smart Cards Help The Country Of Uganda Provide For Secure Transactions

For many of Dade Behring's customers, next-day delivery is not good enough. The $1.3 billion laboratory instrument manufacturer often has to ensure same-day delivery. Integrating technologies with its new SAP system helps Dade Behring deliver the goods on time.

Business Solutions, April 1998
Written by: Nancy Senger
During her recent tour of Africa, Secretary of State Madeleine Albright praised business and government officials of Uganda for the overwhelming progress the central African nation has made to improve the economic and overall living conditions of its citizens. Her office has also been made aware of the significant contributions to the Ugandan economy by U.S. private industry, including companies like Productivity Enhancement Products, Inc. (PEP) of Laguna Hills, California.

Smart Card Payment System Installed
PEP's smart card-based EMAX system was installed at the International Credit Bank (ICB) in the capital city of Kampala. Since then, it has become the most widely accepted payment system in Uganda other than the Uganda shilling, according to Gary Beadle of PEP's Smart Systems Division. He adds that:
  • More than 4,000 Ugandans now use the PEP smart cards to make their everyday purchases at some 500 merchant locations, and the public's acceptance is growing at a rate of 250 new customers every month.
  • More than $1.5 million (United States dollars) are being transacted per month and the rate is growing exponentially.
  • In addition, the system has been accepted for fuel purchases throughout the country and by the Uganda Revenue Authority (IRS equivalent) for tax payments and license fees.

    Smart Cards Used In New Applications
    Ugandan government agencies continue to endorse the Smart Money system. All government offices, including the Ugandan Army, must buy fuel with a "SmartFuel" card. Also, Smart Money is the only form of payment accepted for tax payments.

    The success of "SmartFuel" has prompted government consideration for using smart cards for other systems, including driver's licenses, military identification and employee payment.

    Smart Cards More Secure Than Cash
    Beadle says The World Bank sees corruption and fraud as the largest threats to continued growth and stability in Africa. Prior to the introduction of cashless transactions, consumers and merchants alike were subject to daily threats of robbery, injury and even death. The situation was especially critical for merchants who, at the close of business each day, were forced to carry thousands of shillings to the banks for deposit. Furthermore, Ugandan government officials are concerned about fraud in fuel and telephone use.

    Smart Cards Reduce Fraud
    Patrick Katto, president of ICB, said in a recent newspaper interview that the Ugandan government "will save millions of shillings lost through fraudulent rackets in fuel. I can assure the public that the days of fuel fraud are over because the SmartFuel card is scientifically tested to check exactly that." The convenience and security factors surrounding the Smart Money or smart card system are becoming increasingly attractive to emerging economies.

    Components In Smart Card System
    There are three major components to PEP's Electronic Money for Advanced eXchange (EMAX) system:
  • The PC-based, proprietary software allows the bank to initiate and maintain EMAX smart card accounts. The software provides account reconciliation with both the merchant and the consumer transactions, as well as card issuance and maintenance functions.
  • The EMAX point of sale merchant terminals accommodate two cards: one for the merchant, the other for the consumer. When consumers make a smart card purchase, their money is immediately and safely transferred from their consumer card to the merchant card. Each transaction is electronically recorded and provides a complete audit trail.
  • The smart cards are available as consumer or merchant cards. The consumer cards are protected by individual personal identification numbers (PINs) and by a photograph of the consumer on the card. The merchant card is protected by a PIN and photograph or company logo.

    Application Impacts The World Market
    Beadle said the Ugandan application of the Smart Money system is prompting surrounding countries to sit up and take notice of smart card technology. PEP sees unlimited market potential in Africa.

    "Doing business in Uganda has been easy," he said, "with none of the problems usually associated with Africa. Negotiations were quick and installation was completed within 90 days. Payments were wired in advance, in U.S. dollars, into PEP's bank account." He said merchants were quick to adapt to the system and the challenge of teaching Ugandans how to use PINs was overcome in a reasonable time period.

    Encryption Software Included In Smart Card Solution
    PEP engineers spent three months in Uganda installing the system, which includes computers, software, merchant terminals, smart cards and printers with a camera for cardholder photos. The engineers designed and built the merchant terminals, wrote the operating software and formatted the smart cards. The system also includes encryption software that had to be approved by the U.S. State Department before it could be shipped to Uganda.