BofA, Visa test smart cards

Bank of America and Visa will announce tomorrow that they are running the first U.S.-based test of two-chip smart cards.

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Bank of America and Visa will announce tomorrow that they are running the first U.S.-based test of smart cards that use two chips to combine payment functions with security applications.

The cards, also known as chip cards, are being used by about 300 Bank of America employees in San Francisco for Visa's version of electronic cash, for secure access to their PCs, and to gain entry into their office building and parking structure.

The bank hopes the trial will help it design future smart card programs for customers, according to Bette Wasserman, vice president and smart card product manager for Bank of America's interactive banking division.

Smart cards are essentially credit cards, except they have computer chips embedded in them instead of a magnetic stripe on the back.

Bank of America employees at its Clock Tower building in San Francisco have been issued photo identification cards containing two computer chips.

One chip handles Visa Cash, along with software that protects data and provides access to employees' PCs. The card's second chip, which utilizes contactless technology that can read the chip from a distance of several feet, offers employee access within the landmark building and parking facilities.

Smart cards have been slow to catch on in the United States, but they are popular in Europe and parts of Asia for electronic cash and other uses.

Industry analysts suggest that creating multifunction cards, such as those in the Bank of America trial, is key to smart card adoption because costs for creating a smart card infrastructure can be spread across several uses.

Bank of America employees can load cash onto their smart cards using a device similar to an automated teller machine (ATM) and their ATM, debit, or credit cards. They can use the e-cash to buy goods from vending machines at the office facility, on the Internet, or elsewhere Visa Cash is accepted.

This summer, Bank of America and Visa launched a chip-card trial that lets several hundred cardholders use Visa Cash for small purchases on the Internet.

Yesterday Citibank and Chase Manhattan Bank launched a smart card trial in Manhattan that lets consumers make purchases at local stores using e-cash on smart cards.

The Bank of America employee card and its applications were developed by Giesecke & Devrient America, a smart card specialist.