Latin America is fast becoming fertile ground for smart card technology.
In a few weeks Visa International will launch significant tests of cards with stored value applications in Argentina and Colombia.
Other tests in Mexico and Brazil are scheduled for later next year.
While smart cards are more common in parts of Asia and in France, Latin America promises to be another important market. Generally, Mexican banks and merchants are not encumbered by existing card technology that would make it more difficult to switch to something new.
"We have an opportunity to leap-frog years (of existing technology), said Day Jimenez, Visa's vice president of business development for Latin America.
For example, he noted that about 40% of the merchants in the region do not have point-of-sale terminals, so it would make sense for those merchants to purchase the most advanced device because they have nothing to lose.
The tests, slated for the capital cities of Buenos Aires and Bogota, involve the employees of the participating banks. Seven banks in Argentina and 12 in Colombia, including Citibank, will participate in the pilots. About 50 merchants in each country have agreed to accept the cards.
All bank employees with debit cards, or Visa Electron cards as they are known outside the United States, will be eligible to participate. New Electron cards with chips that can store cash will be issued to the employees, who may use the cards to purchase items at convenience stores, fast-food restaurants like Burger King and McDonald's, gas stations, and parking garages.
Between 2,000 and 3,000 cards will be issued in each test, and just three automated teller machines in Argentina and two ATMs in Colombia can be used to replenish the cash value on the chip.
Visa is hoping to learn from the test how much money cardholders are willing to store on a chip card, and where they want to use the cards.
Latin America is not the only region testing smart cards. Visa launched a pilot in Australia in November that involves five banks. Spain will also be the first country in Europe to participate in a similar test of Visa cash cards. About one million reloadable Visa Cash cards will be issued by Visa's members in Spain.
Another test in Canada began last week with Toronto-Dominion Bank, which said it is issuing 10,000 smart cards to its employees to use initially in the bank's cafeteria.
Visa also coordinated a major test in the United States, involving First Union, NationsBank, and Wachovia, to coincide with the Olympic Games. Unlike some of the tests abroad, however, the U.S. banks will issue primarily disposable cards instead of cards that allow consumers to continually add more cash.
