Lessons from Malaysia

[Dave Birch] The Malaysian national ID card is known as MyKad and also as the Government Multi-Purpose Card (GMPC), which since 2001 has been issued on a smart card platform.  It was one of the world's first smart ID cards, so by now we ought be able to learn some useful lessons from a study of its trajectory.  The key point to note, in informing the debate elsewhere, is that after half-a-billion ringgits spend and 20 million MyKads issued, the anticipated multi-application boom has failed to materialise.  The card was planned to have eight separate applications by now, but it's only use is for ID.  The other applications have just not migrated.  Of the 10 million drivers in Malaysia, only 1.3 million have added their driving licence information to their MyKads.  Of the six million international passport holders, fewer than half a million have opted to include passport information on their MyKad.

Technorati Tags: ID cards, loyalty, payments, retail

As part of the national rollout of MyKad, the government had planned to re-issue the majority of paper ID cards (around 15 million) with smart cards over a period of about four years.  Although not a mandatory upgrade for citizens (an ID card is mandatory even if it is the existing paper version) they are encouraged to upgrade with the incentive of a free replacement card before this date.  Citizens become eligible for MyKad  at 12 years old and, because an ID card is required for many activities (eg, opening a bank account or interacting with Government departments), most citizens opt to apply for the card then rather than wait until their 18th birthday, at which point an ID card is mandatory and they can be fined for not holding one.  The cards were designed to support a broad set of applications:

• Government: National ID (including fingerprint), Passport, Driving licence, Health Card;
• Financial: e-Purse and ATM; The financial applications are provided by MEPS, a national banking network operator.
• Transport: Contactless road tolling: The ID card has to be put in a transponder in the vehicle;
• Remote authentication: PKI certificate.

The PKI and health applications were added since the original card was issued and required an upgrade to a 64Kb card (from the original 32Kb).  Not all the cards in circulation have all of applications: of the issued cards, only approximately 450,000 cards contain the extra contactless Touch 'n Go application, requiring a separate contactless MIFARE Classic chip.

These new applications haven't yet made the card a compelling proposition for all Malaysians.  Deputy Home Minister Datuk Tan Chai Ho has said there are some 200,000 uncollected MyKad which cost the government RM38 each to produce, and these cards will be sent to the JPN headquarters in Putrajaya to be destroyed.  He also noted that as of January 2007, "There are 400,080 Malaysians who have yet to apply for their MyKad. Although the government has not announced the expiry date for the old identification cards, they should not wait until the last minute."

The original multi-application vision (which was not confined to MyKad) for this kind of ID card was that if would replace a wallet full of cards with one.  But in practice, Malaysians have proved reluctant to entrust their entire life to a single card (and there's no reason to suspect anyone else will act differently).  As the New Straits Times said "The prime reason for this is the fear that losing ones MyKad means not just losing ones identification document but also being cut off from ATM and credit-card access, even if this is only temporary".  The issue over loss is very real.  According to the Deputy Home Affairs Minister Dato Tan Chai Ho, in the last three years more than 2.3 million MyKads (which only have a guaranteed lifetime of one year) have been reported lost.  Another reason for the limited usage is lack of infrastructure: the cards have no ecology.  The police insist on drivers producing conventional driving licences because officers don't have MyKad readers and as I understand it, only one hospital in the entire country can retrieve medical details from the cards.

Private sector use of the card has also been very limited.  By and large, banks have preferred to add the "Touch and Go" low-value payment function to their own cards rather than add a bank application to MyKad.  Thus the 18 million MEPS Cash purses on MyKad cards are rarely used (and I'm not sure that the 16 million on bank ATM cards are used much more).  But there are now moves afoot to boost private sector use by adding a loyalty scheme to the card, a move presumably being studied closely in the U.K., Australia and other countries planning the introduction of smart ID cards.  The cards will have a loyalty number added to them so that retailers can use it to link to their own schemes rather than issuing their own cards.

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public.
[posted with ecto]