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Biggest U.S. smart card trial ends

The market trial in Manhattan was designed to see how consumers and small merchants would use smart cards loaded with e-cash.

The largest U.S. pilot for smart cards is drawing to a close after 14 months. The market trial in Manhattan's Upper West Side was designed to see how U.S. consumers and small merchants would use smart cards loaded with e-cash.

The high-visibility test, due to wind down December 31, involved Visa, Mastercard, Chase Manhattan Bank, and Citibank. It featured the ability for merchants to accept e-cash from a single smart-card reader for both Visa Cash and Mondex, two incompatible schemes for so-called "stored value."

The four sponsors said in a press release that they "achieved their objectives" for the trial. The U.S. market has lagged behind Europe and Asia in using smart cards. However, the trial is not being expanded into a full deployment, mainly because the partners had different objectives.

"Multifunction cards is really what 's going to drive smart cards in this country," Visa spokesman Greg Jones said. "All of the parties learned from the trial."

Multifunction cards include more than one use, for example, loyalty or frequent-user programs on the same card with e-cash, credit, and debit uses.

Smart cards are plastic cards the size of credit cards that have an embedded computer chip. The card companies are eager to move to smart cards from today's standard magnetic stripes on the back of cards so that more data or applications can be loaded onto cards.

Launched in October 1997, the trial involved issuing about 100,000 smart cards and more than 600 merchants also participated in the trial. The average amount of e-cash or "stored value" loaded on the cards by users was $38, and customers purchased more than $1 million in goods and services, funds that were electronically deposited into merchants' accounts. Initially the trial had been scheduled for six months, but it was then extended.

The biggest technical feat of the project involved accepting both Visa Cash and Mondex e-cash from the same point-of-sale terminal. For merchants with limited space two readers at the cash register would take up space needed for other purposes.

The companies concluded that several factors must be combined to push smart cards successfully into the U.S. market. They included greater interoperability, more merchants accepting smart cards in other parts of the city, and the ability to use the chip cards for unattended needs such as telephones, parking meters, and transit systems.

All parties will continue to develop and test a variety of smart card programs in 1999.