Amex, Hilton And IBM Pilot Smart Cards With Corps.

Several thousand road warriors are testing the first multi-application smart card in a pilot spearheaded by American Express, Hilton Hotels Corp. and IBM that will last until year-end.

At eight Hilton Hotels, travelers can insert their chip-embedded American Express Corporate Card, Hilton Optima Card or HHonors Diamond VIP Card in a kiosk to check in or out, print a current bill or change their profile in the Hilton HHonors program. Some cardholders in the test are using Amex Corporate cards to check in at special gate readers that American Airlines has installed. That's part of a related pilot announced last October by Amex, IBM and American. The Amex cards also offer full charging functionality.

Travelers from Chevron, Monsanto, a pharmaceutical company and a Big Six accounting firm are among a handful of real customers testing the cards. In addition, Amex, American Airlines, Hilton and IBM employees also are testing the cards.

While this pilot may be the first multi-application effort, it certainly won't be the last that business travelers will see this year. Indeed, industry watchers see 1997 as the year for piloting smart cards, with their future roll out dependent on the successes or failures reported in coming months.

In a recent survey conducted by Business Travel News, every national vendor of payment systems queried said it intends to conduct a pilot of smart cards to benefit business travelers by year-end.

From IBM to Motorola, Siemens to Schlumberger, the leaders in smart card technology have big plans for their products, with many targeting travel and transportation as prime areas. The only question is how quickly these vendors can convince U.S. cardholders and merchants that this technology will produce returns great enough to cover the investment needed to install the readers.

In the case of Amex, IBM and Hilton, the intent of the pilot has been to create a solution that actually solves a traveler's problems, emphasized David Boyles, senior vice president of Amex's Smart Card Center of Excellence. For the traveler, the trio is trying to eliminate paper, automate frequent travel scenarios, store a profile and allow for customized loyalty programs. For the corporation, the benefits in the future could include storing a corporate travel policy, negotiated rates, the employee's ID and even the hotel folio data on the card, Boyles said, and the expense reports could be pre-populated with the folio data. For Hilton, the intent is to enhance the service level travelers presently receive at the front desk or through the HHonors desk.

"We're giving guests control of their own information, to update our databases if they want; improve and speed-up the checkin and checkout process; and meet or exceed the expectations of our guests," said Bob Dirks, senior vice president of marketing for Hilton Hotels Corp.

Hilton executives estimate that guests using the kiosk will be able to shave as much as three minutes off the time it currently takes to check in manually. More important, guests will be able to verify that everything in their reservation is correct before they check in, said John Luke, Hilton's vice president of front office operations. The global distribution systems now don't send properities the hotel or airline frequent user numbers, Luke said. But those numbers can be stored on the chip and pushed to a hotel's database at checkin, he said.

To entice cardholders to use this technology, Hilton is offering 1,000 bonus miles for every checkin via kiosk, up to a maximum of 55,000 points. However, Dirks is convinced that the points won't be necessary to entice travelers to use the technology in the future.

In the test, 8K computer chips--50 times the storage capacity of magnetic stripes on most credit cards--are embedded on one of three cards in the pilot. Some of those carrying the Amex Corporate Cards also are testing use of their smart cards at special American Airlines gate readers as part of a pilot announced last October. Kiosks are installed in Hilton airport hotels at O'Hare, Philadelphia, Burbank, Houston and Minneapolis, as well as at the North Raleigh, Orlando North and Bellevue hotels.

The computer chips hold a customer's profile, including name, address, card number and HHonors Worldwide guest reward program number, along with hotel stay preferences such as type and location of rooms. In addition, participants have the option to store on the card a number of other airline loyalty program numbers.

Greg Conley, general manager of IBM's travel and transportation industry business unit, said the pilot will expand significantly, with "hotels, rail, car rental, American Express and other card issuers." A car rental vendor is expected to be announced soon as well.

Dataquest, a leading industry analyst group, projects the overall market for memory and microprocessor-based cards will grow from 544 million units in 1995 to 3.4 billion units by 2001. Of that figure, smart cards, which accounted for only 84 million units in 1995, will grow to 1.2 billion units by 2001.

However, Dataquest projects that by 2001, 40 percent of the smart cards will be sold in Europe, 25 percent in Asia--Pacific Rim, 20 percent in North and South America and 15 percent in the rest of the world. Schlumberger Electronic Transactions noted that smart cards in the North American market totaled 13 million in 1996, but will grow 84 percent, to 273 million, by the year 2001.

While only some segments of North America's population might be carrying smart cards by 2001, it's a sure bet that business travelers will be among those targeted.

"There are four or five really good applications," said Pete Fallon, marketing manager for Siemens Components financial and transportation sector. Among them, collecting expense data, loyalty programs, cash payment and access for air, hotel, car or other vendors.

Conley said smart cards can be used to speed travelers' through the travel process, from airports, hotels and car rental counters, to airline clubs and passport control.

And by incorporating biometrics--a unique identifier like a fingerprint, eye print or picture--into a smart card, vendors could actually raise the level of security in place at most airports and immigration posts today. A reader could match the biometrics stored on the card with the human presenting it for a 100 percent match, Conley said.

In the ultimate scenario of how the cards can benefit business travelers, Conley envisions chips that will store booking data and all expenses incurred during a trip, to be downloaded to prepopulate an expense report upon return. Working with Sabre's Business Travel Solutions and the Amex/Microsoft Rome automated booking solutions, IBM is trying to integrate booking data on the smart card chips, Conley said.

During the pilots throughout the rest of the year, IBM is trying to learn how its "smart cards really make the process much more seamless and document free," Conley said. "Consumers want more than a payment device. There are opportunities for travelers to get more preferred treatment using smart cards rather than interacting with a person."

In other smart card developments:

* IBM and Siemens last month planned for joint development of a new multi application card operating system. Although Siemens Nixdorf has been developing smart cards for Lufthansa, its U.S. divisions have focused on providing chips to other companies that are integrating them into applications like phone cards, payment systems or identification cards. Siemens also soon plans to debut its first combi-card, a combination of contactless and contact that can meet the needs of both the banking and airline industries. Due to security concerns, different industries have adopted varying standards for smart card applications, making it difficult to develop multi-applications without a card that combines both standards.

* Motorola recently announced plans to enter the global smart card business as a total solutions provider, targeting transportation as one of five industry segments of its focus.

* MasterCard International embraced an open-platform technology called Multos as its smart card operating platform, in an attempt to make widespread use of smart cards a reality by the new millennium. Using this open standard, banks will be able to allow cardholders to select which functionality they want on a smart card, said G. Henry Mundt III, MasterCard executive vice president. The consumer can include a standard application like credit and debit, along with other applications like electronic cash, an airline loyalty program or a transit pass on one card.

* Visa International announced a separate global migration strategy that also calls for open architecture based on the Java programming language, implementation tools, industry standards compliant with the EMV standards of Europay, MasterCard and Visa. "Bottom line, Visa's new Partner Program helps our members evolve and expand their card products in a way and at a speed that best fits their needs," said Edmund Jensen, president and CEO of Visa International.

A separate group of smart card vendors announced their support of Java smart card applications that will ease operability over the Internet.

* A group of smart card vendors, including CyberMark, Gemplus, Product Technologies, VeriFone, V-ONE Corp. and 3G International Inc., formed a Smart Card Technology Alliance to produce and market multi-application smart card platforms for college and corporate campuses, resorts and other closed venues across the country.