Abstract: In the game of its life, the industry searches for standards and the killer application that will drive widespread use As the decade winds down, U.S. payment systems are imperceptibly getting smarter. It's true that you hear more about full-fledged smart card use abroad, where nifty chip cards buy everything from telephone time to a loaf of bread (ABA BJ, September, p. 54.) But while naysayers here are focusing on all the applications (including home-banking) that haven't yet made smart cards a household name, the industry is far from a washout in country. Technology companies like Mondex and its banking partners are testing--and testing again. A massive effort is quietly under way in federal, state, and privately-funded smart card pilots. Some have been successful. Others, like Mondex's recent pilot involving hundreds of vendors on Manhattan's upper west side, have had their problems, but each project is doing its part to illustrate what smart card use will look like in the future. To make smart cards a popular payment form, vendors admit, is a tall order. They will need to cooperate, and in some sense coordinate, development efforts for encryption schemes, smart card operating systems (of which there are about 20 currently), and application programming interfaces. There also needs to be a compelling business reason, from each vendor's perspective, to offer smart cards. From consumers' perspective, there has to be an obvious benefit like, this card is incredibly easy to use, and stores my information and value accurately and is very safe. Nevertheless, the technology's stewards--including Gemplus, Mondex, Verifone and Visa--remain hopeful that common standards will prompt many vendors, merchants, and ultimately consumers, to begin using smart cards. Multi-use cards The key, developers agree, is to develop multi-use smart cards. Although the utopian vision for smart card use is that a single card could it all, everywhere, developers tend to think that it makes better sense for a card to house logically-connected functions. Some envision a future where the typical consumer would carry one card that houses personal information, including medical and insurance data; another card for business authentication, including building and network access, as well as business travel use. Yet another card, with a series of purse, or stored-value applications, would be used for cash replacement. Advocates say that U.S.-based, multi-use smart card applications that include some sort of payments function will become commonplace-though it will take about a decade to do so. Smart cards offer benefits that are only now becoming more evident, says Diana Knox, senior vice-president of chip products for Visa, U.S.A. This is particularly due to the development of corporate card functions such as digital signature authentication, and card use for TE reloadable stored-value; and a third card which is a hybrid, magnetic-stripe and chip card with stored-value, loyalty, and credit functions. Cards are used in the MBNA cafeteria, as well as for purchases at the merchants based in the corporate compound. The test is significant, Knox says, because it involves more extensive use of reloadable cards than in the previous pilots, and because it's testing the viability of a combination, magnetic stripe and chip card. …
Publication Year: 1998
Publication Date: 1998-11-01
Language: en
Type: article
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