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HolidayBuyer's Guide
Tech Industry

Smart cards to go

VeriFone readies a portable smart card reader for retailers, designed to seed the market so consumers can spend the cash VeriFone hopes they will store on their cards.

Underscoring its big bet that consumers will use smart cards, VeriFone (VFI) today announced a portable smart card reader for retailers, designed to seed the market so consumers can spend the cash VeriFone hopes they will store on their cards.

The new, battery-powered Omni 1250 reader is designed for use where consumers have customarily paid cash--taxis, buses, food vendors, dry cleaners, newsstands, farmers' markets, ballpark vendors, and fast food restaurants.

The announcement follows VeriFone's September 30 announcement of a line of consumer smart card devices for the home, including the countertop Personal ATM, and the end-to-end VeriSmart system for creating smart card applications and services.

The size of a credit card, the smart card has a microprocessor that can be used to store cash value or track customer uses for loyalty programs like frequent flyer programs. Research firm Dataquest expects the smart card market for financial applications to explode from about 22 million cards in use today to more than 1.2 billion over the next five years.

The Omni 1250 terminal will process smart cards that use a variety of stored-value schemes, including Visa Cash, MasterCard Cash, Mondex, and other applications.

Sun Microsystems also today released smart card technology, introducing its Java Card, an API (application programming interface) for smart cards. The API lets software developers use Java tools to create smart card applications, and Sun claims it is the first open interface specification and the first standard language for smart cards. IBM and smart card maker Gemplus announced support for the Java Card API.

Yesterday Motorola announced two fast new "crypto chips" that Schlumberger will use in its new high-performance Cryptoflex smart cards for electronic commerce, banking, email, and corporate security applications.

"You're seeing the industry coalescing around the need to integrate standards in products," said Lloyd Mahaffey, VeriFone global vice president of marketing. "There's still a lot of debate on what scheme to pick and what devices to put it into."

Smart cards are commonly used in Europe, but they have yet to catch on in the Unted States. Visa conducted a pilot at the Summer Olympics Games in Atlanta last summer, where more than 5,000 merchant terminals accepted the cards. Major U.S. banks are preparing to launch smart card trials later this year and in 1997.

"We've seen a reluctance to fully embrace [smart cards] because of the limited number of merchants that can accept them," VeriFone's George Hoyem, vice president of the company's business systems group, said in a statement.

Mahaffey said VeriFone's first order of 10,000 Omni 1250 readers came from Holland. The devices will be priced between $250 to $400, depending on memory and configuration.

Consumer electronics manufacturers, PC makers, and set-top box manufacturers are moving to incorporate smart card readers in their devices. Key Tronic has said it will embed smart card readers into the keyboards it makes for most major PC manufacturers. WebTV Networks, which makes a TV add-on so consumers can surf the Web on their television, also has built in a smart card reader.