PEP Bank launches a new initiative next week with commuter rail service Metrorail and international financial services company Visa, which could finally bring smart card banking technology into everyday use in South Africa.
Banks have been struggling for some time to get smart card technology, which involves using debit cards rather than credit cards to make payments, off the ground in this country.
You need a positive bank balance to have a debit card, and the card carries the information about how much money is in the account and records further deposits and withdrawals.
If the scheme succeeds, ATM and credit cards which need extensive telephone networks, will become less popular.
Alon Stransky, PEP Bank project manager, says the principle of pre-paying amounts is now widely accepted in the cellular telephone industry and this should make the acceptance of debit cards, using smart card technology, easier. Added to this is greater security for users, who will no longer have the risk of carrying cash.
The initiative is being launched on a pilot basis in Cape Town, where the smart cards can be used to buy Metrorail tickets. They can also be used at Checkers-Shoprite Stores to buy groceries.
There is an initial charge of R10 for the card with no further charges. The cards can be topped up at machines similar to ATMs, which will be available on railway station platforms. The debit card account can also be linked with a PEP Bank savings account with electronic transfers available at ATMs. The downside is that in the pilot scheme, if you lose your card, you lose your credit balance.
Stransky says the pilot scheme is to be used to fine-tune the system. When it is fully streamlined the intention is to roll out the use of the smart cards throughout the transport industry and into other fields such as pension payments.
Smart cards will resolve many payment problems in rural areas.