<B> Smart Card Test Teaches Hilton</B>
By Deborah Mora
<i>Beverly Hills, Calif.</i> - Officially ending its one-year smart card pilot, Hilton Hotels Corp. has learned some valuable lessons--chief among them that while the technology is close to being ready for public consumption, it still is not quite there.
But recent developments, including an electronic purse partnership among American Express, Banksys, ERG and Visa International, just might push it ahead more quickly.
For the present, Hilton will keep two of the original eight airport hotels kiosks (<I>BTN,</I> June 9, 1997), at the O'Hare and Burbank Hiltons. The 5,000 American Express Corporate Card holders and 1,000 Hilton Optima Card and HHonors Diamond VIP Card users continue to use their cards at the hotel kiosks to check in or out.
By the end of September, these 6,000 cardholders also will use their smart cards in new electronic locks to be installed on each room door in the Hilton New York & Towers. Guests would simply present their cards upon checkin for encoding and use them as their room key, said Tom Daly, Hilton vice president for loss prevention. Daly couldn't say when the locking system, developed by CISA of Italy, would be installed in other Hilton properties.
As a result of the smart card pilot, Hilton officials determined there is a need to integrate the smart card at the front desk for a more efficient checkin. This would let front desk attendants have access to all data on a smart card through one quick swipe. Thomas Spitler, Hilton director of front office operations and systems, said the corporation will explore this capability in 1999.
Officials found that hotel guests used the kiosks only if checkin lines were long. Smart card developers also are looking into adding an electronic purse application to pay for coffee, newspapers and other low-cost items.
On the long-standing American and Continental Airlines and Amex smart card program front, American has added electronic certificates to the smart card chips that allow flyers four free visits to its Admirals Club. The incentive is aimed at luring customers into using their cards more frequently and testing how well this electronic admittance system works.
American Airlines is not alone in its interest in smart cards. The word from Schlumberger, of New York City and Paris, is that all airlines are exploring smart card usage, said marketing manager Jonathan Adams. The concern among most airlines, however, is deciding how they will implement smart cards to reduce costs.
The costs of the cards and deploying smart card readers are hampering the growth of the technology, said Ed Barrett, general manager of emerging technologies at Rosenbluth International in Philadelphia. The cost of the cards alone average $8-10, he said, and the total cost of outfitting a major hotel could probably run into the millions, with many different variables contributing to the price tag. Putting the cards into use at high-end hotels also will be a challenge, said Jerry Smith, IBM's smart card opportunities manager for North America.
Steven Landau, director of Solutions Americas for Gemplus in Redwood City, Calif., said technologically, there are many applications available. It's just a matter of corporate entities working out deals with one another to implement the smart card functions.
For instance, Landau said, an application has been developed whereby a cardholder using a "smart" cell phone can access his flight information and even purchase an electronic airline ticket. If a cardholder buys a ticket via his or her cellular phone, all of the flight data is transferred onto the smart card, and the card essentially becomes an airline ticket.
Patrice Peyret, Java Card director for Sun Microsystems' Consumer and Embedded unit, in Palo Alto, Calif., said the use of such e-tickets will eliminate the need for travelers to present identification or credit cards at the airline gate, because the smart card already will have authenticated the traveler's identity at the point of purchase. "The cards will be directly coupled with air miles and could be coupled with other traveler services such as privileged parking at the airport," she said.
Now it's up to cellular phone companies and airlines to strike a deal to make these functions available to card holders--and "negotiations are going on right now," Landau said.
Exactly when there will be widespread deployment of the cards remains anyone's guess. Most officials predicted card usage will be widespread by 2001. But for IBM's Smith, it's all relative. "I've been working on this for four and a half years and back then I was saying two to three years," Smith said. "It's probably still two to three years."
Before the technological curve reaches this point, though, standards have to move toward interoperability. One of the "wild cards" in this process, said Schlumberger's Adams, is Internet commerce. With smart cards, online purchases can be made securely and online merchants can incentivize customers to return to their Websites.
"Internet commerce will indeed accelerate smart card adoption," agreed Peyret. "Smart card-based strong authentification to a bank server is a more efficient alternative to SET, and is likely to appear soon in several pilots."
<B>In other developments:</B>
<ul><li>American Express, Banksys, ERG and Visa International announced plans to become shareholders in Proton World International, a new company spun off of Proton smart-card technology assets developed by Banksys. Proton has an electronic purse application used on 30 million cards in 200,000 terminals in 15 countries.
<li>The first smart card SET-enabled payment transaction via the Internet was demonstrated last month in Washington. The companies involved included Certicom, GlobeSet, MasterCard International, Mellon Bank, SETCo, Schlumberger Smart Cards & Terminals and the U.S. Treasury Financial Management Service, Bureau of Engraving and Printing.
<li>In April, the OBI Consortium, which is the organization that created the Open Buying on the Internet standard, entered a partnership with CommerceNet to manage and host open buying on the consortium. CommerceNet replaced SupplyWorks.
<li>Smart card manufacturer Schlumberger announced that it will offer MULTOS smart cards. The company now offers the applications of loyalty, incentive, ID and ticketing programs.
<li>Industry leaders released the new OpenCard Framework 1.0 technology to help software developers create smart card applications that can be used with network computers, point-of-sale terminals, PCs, set-top boxes and automatic teller machines.
<li>MasterCard announced it successfully completed testing its debit/credit Chip Payment Application on the MULTOS operating system. Midland Bank in the United Kingdom will begin a live trial of MCPA late this summer with over 400 U.K. retailers.
<li>Credomatic International Corp. launched the use of Mondex electronic cash in Costa Rica. During the project's first phase, Credomatic issued 10,000 Mondex cards, with more than 7,500 cards with the MasterCard credit function on the magnetic stripe and the Mondex electronic cash function on a chip.