While overseas organizations claim most of the credit for recent advances in smart cards and electronic purses, U.S. banks have begun weighing in with significant programs of their own.
Large-scale tests by bank-owned companies like MasterCard, Visa, and Electronic Payment Services Inc. will attract most of the attention, but more modest efforts are well under way.
Citicorp, for one, has incorporated smart cards in its computerized home banking service. Banc One Corp. is issuing a cobranded credit card enhanced with a chip. A few other banks use cards with computer chips to bolster security in corporate banking and funds transfer networks.
And in New York, both Citicorp and Chemical Banking Corp. are following the EPS model, testing the waters of prepaid direct-debit systems with their own employees.
Visitors as well as employees at the Citibank operations center in Long Island City, Queens, can buy stored-value cards from vending machines for use on the premises.
Chemical Bank has broken the card-as-cash mold further by adopting AT&T Corp.'s "contactless" smart card for use in a midtown building's cafeteria. The technology is elegant but nonconforming - the cards do not have to be inserted into a fixed position in a terminal.
Ronald Braco, a Chemical Bank senior vice president and smart card champion, acknowledged that the contactless approach might not survive an industrywide consensus on conventional contacts. But Chemical's alliance with AT&T Global Information Solutions gave it an early window on a technology that Mr. Braco views as operationally superior.
"AT&T's strength is in the operating system, and there is no reason it can't be ported to a contact smart card if that's the way the market goes," Mr. Braco said. Contactless is "perfectly fine for the closed system we have today. There would be other consequences if we moved to an open system."
Chemical's system went live in June 1994. An initial group of 400 employees - volunteers from all levels of the organization - have been using the cards an average of four times a week. Signs have been posted in the cafeteria to recruit more users; Chemical recently offered free breakfast to cardholders who present three smart card receipts.
Value can be loaded on the chip at specially equipped automated teller machines, and can be checked in balance readers. Transaction receipts with updated balances are delivered at the point of sale.
Chemical's follow-up survey got an 82% positive response; cardholders viewed the system as more convenient and secure, and faster than cash.
Users were negative on two points: They wished balance readers were closer to the point of sale, and they wanted to be able to use the cards elsewhere - which Mr. Braco viewed as good news.
"There is no doubt in my mind that people will use it and use it enthusiastically," he said of the stored-value card.
Mr. Braco's own enthusiasm comes from knowledge of many local, national, and international initiatives, which he can track through his membership in the Smart Card Forum. He is chairman of its financial services working group.
"Two years ago, when we were getting started in the forum, we didn't even have a terminology that all could agree on," he said. "Now we are up to 170 members from a variety of industries. We are all thinking about going forward in a much more focused way, beyond issues of where the chip fits on a card to the way core pieces of the operating system fit together."
Like other smart card advocates, Mr. Braco must contend with some difficult economics. In small test quantities the cards cost $7 to $10 each, not competitive with mass-produced credit cards at well under $1.
But he said technology cost trends are clear, and even if smart cards cost a few dollars each, their additional memory will make possible the multiple applications that promise additional revenues for issuers.
"Most businesses take 10 years to reach critical mass, but I can see this happening in five - faster than VCRs," Mr. Braco said. "Some very large announcements are coming this year, and by the end of 1996 the migration to a national scheme will be clear."
