GSA begins issuing SmartPay Chip & PIN cards to agencies

The General Services Administration expects to hand out over 1 million new SmartPay cards this year. The new cards include an embedded microprocessor chip that ...

The General Services Administration SmartPay Program has started issuing Chip & PIN charge cards to federal agencies this month. The cards include an embedded microprocessor chip that will enable data to be encrypted differently each time the cards are used.

President Barack Obama mandated the security upgrade last October when he signed Executive Order for Improving the Security of Consumer Financial Transactions on Oct. 17, 2014.

“We’re going to begin making sure that credit cards and credit-card readers issued by the United States government come equipped with two new layers of protection: a microchip in the card that’s harder for thieves to clone than a magnetic strip, and a pin number you enter into the reader just as you do with an ATM,” Obama said during a speech at the Consumer Financial Protection Bureau in Washington last October. “We know this technology works. When Britain switched to a chip-and- pin system, they cut fraud in stores by 70 percent.”

The executive order required that all federal government credit, debit and payment card programs, including GSA SmartPay, adopt enhanced security technology, such as Chip & PIN enabled cards.

David Shea, director at the Office of Charge Card Management at GSA, explained the change in technology on the Federal Drive with Tom Temin .

“What’s happened is that these external fraudsters have gotten very good at replicating the mag-stripe card. The chip technology is going to protect us from that. And what you’ve had happen recently is that the cost of this external fraud, the scales have tilted to where now the economics make sense.”

“GSA’s government-wide SmartPay program is an extremely effective and successful payment solution that has proven to provide streamlined and secure ability for the government to conduct every-day business transactions,” said Tom Sharpe, GSA’s Federal Acquisition Services commissioner, in a press release. “By working with our industry partners on the addition of Chip & PIN technology to GSA SmartPay cards. FAS is quickly and efficiently providing greater security and even more value to the payment products and services we offer our government agency customers.”

GSA’s SmartPay program expects to distribute more than 1 million Chip & PIN enabled cards throughout 2015. The cards will be available via the GSA SmartPay 2 master contract.

“In the longer term, we’re looking towards the next generation of the program, which not surprisingly will be called SmartPay 3,” Shea said. “And we’ve got to start that work out in advance of the contract awards, because we’ve got a lot of market research to do, meeting with stakeholders and customers to capture their needs, developing the contractual documents, allowing time for competition.”

“Data from a traditional card with a magnetic stripe can be easily copied with a simple and inexpensive card reading device,” said a GSA webpage describing the advantages of Chip & PIN technology. “The payment information on a mag-stripe card never changes making it easy for criminals to steal the information and create a counterfeit card. chip and PIN -enabled cards, on the other hand, have an embedded microchip that turns cardholder information into a unique code for each transaction made at a chip terminal. This provides better fraud protection than traditional cards.”

According to a GSA press release, all three contractor banks — Citibank, JP Morgan and U.S. Bank — will employ Dynamic Data Authentication standards for chip technology.

“Very often with this program, as opposed to a traditional contract, the agency gets refunds using the product. For example, over the history of the SmartPay program since the late 1990s, agencies have earned $2.8 billion in refunds — sort of like how you might earn miles on your personal card,” Shea said.

Even though some vendors may not be “Chip & PIN ready” in 2015, the SmartPay cards will still work with all merchants.

Once an employee receives the new Chip & PIN enabled card, GSA recommends that they cut up their old cards.


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