Smart Card Forum Predicts Widespread Use

<H1> Smart Card Forum Predicts Widespread Use</H1>By Mary Ann McNulty

<I>San Francisco </I>- More than 500 people gathered in San Francisco last month to discuss a technology that has no widespread applications. Unusual? Yes. But it's indicative of the interest smart cards are generating as banks, governments and travel vendors look for ways that smart cards can solve particular problems.

At the Smart Card Forum, card promoters said that 1997 will be a year of tremendous development for the technology as several pilots and maybe even specific applications are tried. But they also acknowledged that smart cards will not reach critical mass in the United States until the industry agrees on standards that will allow any cards to be read in any machine and allow multiple applications to be placed on one card.

Trying to solve the first problem, an international group of personal computer and smart card companies announced last month that they're working together to develop open standards that integrate smart cards and computers. Group members want to speed the development of smart card-based applications for the PC by ensuring interoperability among smart cards, readers and computers made by different manufacturers. Interoperability means that vendors must standardize their cards and readers to allow any card to be read by any machine.

The group, which has been working together since May 1996, expects to make its technology available late this year. Companies included in the PC/SC Workgroup include Bull CP8, Hewlett-Packard, Microsoft, Schlumberger Electronic Transactions and Siemens Nixdorf Information System AG. Microsoft also announced plans to incorporate support for smart cards and readers into its Windows operating system and Internet products later this year.

In addition, a group of charge card vendors, including American Express, MasterCard and, most recently, Visa, have been working on standards of their own, said David Boyles, head of the American Express Smart Card Center of Excellence in Salt Lake City, and senior vice president of new business ventures for Amex's stored value group. Amex has likewise been working with banks-which have agreed to convert to accept smart cards over the next three years-and the bank clearing association. Other standards have been published, but Boyles doesn't anticipate interoperability standards until 1998.

One of the biggest boosts for smart card development is coming from the Internet, said Bill Barr, vice president of the Smart Card Forum and executive director of Bellcore. Rather than carrying computers around, travelers could one day carry everything they need on a smart card, which would be used to access files from readily available computers.

"The Internet will offer a whole new world of selling and buying, and the mechanization of what has been cash will provide a basis for expanded purchasing options," said Roger Bertman, vice president and general manager of Internet commerce for VeriFone, a leading provider of card readers. "The smart card will be the glue that will enable the disparate worlds of physical and 'virtual' merchants and a broad spectrum of payment methods to be brought together to tap these opportunities."

High-profile pilots, like the stored-value cards Visa and member banks conducted at the Olympics in Atlanta, are spurring more awareness of the technology, along with valuable research that promoters are using for future applications. In business travel, American Express, working with IBM and American Airlines (see story, Page 1), has become the latest vendor to pilot a smart card application. Previously, Delta Air Lines and Lufthansa issued chip-embedded cards to their frequent travelers to speed them through the boarding process.

Through such tests, promoters hope to solve some of the infrastructure problems in the United States to make smart cards a business reality. To be successful, smart cards must have interoperability and have multiple applications, said Gerald Smith, IBM's manager of smart consumer services. A travel card could hold customer attributes, preferences, ticketing data, loyalty program information, travelers checks and the keys to access other data stored in vendor databases, he said. And the card could hold relevant data for other applications, such as an Internet card, health card and company ID.

For now, the travel industry appears to be grappling with the technology. Virtually any U.S. business that accepts a credit card for payment is equipped with a device that reads the magnetic strip on the back of the card. To accept smart cards, all those merchants would have to replace their readers. The big questions for the industry are: At what costs, and who pays?

One of the newest working groups within the Smart Card Forum is one on travel and entertainment, a major goal in the United States, said working group chairman Michael Chittaro, who also serves as director of international operations for Citicorp Diners Club International. The first of these research pieces is expected out by February.