WASHINGTON - The presidents of MasterCard and Visa called last week for more cooperation among companies inside and outside the banking industry to assure that smart card technology achieves its full potential.
Reaffirming their joint commitment to enhancing payment cards with computer chips, H. Eugene Lockhart of MasterCard International and Edmund P. Jensen of Visa International invited the rest of the business world to come as far as they have in recognizing the need for agreement on a basic set of technical standards.
"In the final analysis, the energies and abilities of many will be pooled to create what none can create by themselves," Mr. Jensen said in a speech to an international card technology convention. Banks, technology providers, government agencies, and educational organizations are among those he said should seek common ground.
Mr. Lockhart cited the Europay-MasterCard-Visa chip specifications project as a necessary step to ensure a common technical foundation. "I can't think of anything worse than waking up in five years to find multiple systems and multiple terminals, Visa accepted in one place and MasterCard in another," he said in an interview following his speech to the Cardtech/Securtech conference.
The messages were both magnanimous and, from a banking industry standpoint, motivated by self-preservation: The executives believe in an open and flexible operating platform to promote free competition, but they also see their organizations influencing the emerging payment system so that their bank-owners retain a central role.
"The payments industry is the core, the heart of the banking business; it's where banks make their money," Mr. Lockhart said, explaining the need for a long-term preservation strategy.
"It is important for banks to start these conversations," Mr. Jensen said in an interview following his address.
Their positions won praise from an executive of Electronic Payment Services Inc., the Delaware-based bank network operator that plans to be an aggressive deployer of chip-based electronic purse cards.
Welcoming their emphasis on the payments infrastructure and underlying technology, Donald Gleason, president of the EPS Smart Card Enterprise, said, "We're pleased with the recent MasterCard and Visa announcements - they validate what we've been doing since 1992."
Mr. Gleason showed a list of about 20 "stakeholders" in the EPS smart card system, ranging from card and terminal suppliers to system integrators to merchants, each of which had to be understood and its concerns addressed for a trial slated to begin early next year.
The experience illustrated the "need to spend more time with each other learning about the business cases," Mr. Gleason said.
Making the keynote speech to 1,400 people at Cardtech/Securtech, Mr. Jensen of Visa strongly endorsed interoperability - the notion of broad system compatibility that until recently was invoked mainly in high- technology circles.
Elaborating on Wednesday, the day after Mr. Jensen's appearance, Mr. Lockhart said, "We have designed the chip for multiple applications. We think that gives members the greatest opportunity to differentiate" against other competitors.
If the agenda of Cardtech/Securtech, which is gaining a reputation as the most influential meeting of its kind, was any indication, the two bank card leaders may indeed be poised to seize the interoperability initiative. They had the two highest-visibility speaking platforms, a status not given to other potentially large-scale issuers of chip cards such as telephone companies, transit systems, and government agencies. All were, however, well represented in the many "conferences within the conference" on such topics as various market outlooks, electronic benefits transfer, and security.
Mr. Lockhart and Mr. Jensen did not minimize the challenge of bringing all interested parties to the negotiating table, but said it is crucial to the future of a technology that promises to make cards far more functional and perhaps more profitable than those based on today's magnetic stripe encoding system.
Mr. Lockhart pointed to his own difficulty in finding a single point of contact in the federal government to discuss the long-awaited conversion of welfare, food stamp, and other paper distributions to card and terminal delivery systems. Such electronic benefits transfer systems are cropping up state by state, and some proponents want to move them toward smart cards.
Mr. Jensen listed several features that chip technology makes possible, whether in cards or other means of electronic commerce, but that require agreements on interoperability. These include digital signatures and data encryption.
"However it all ends, we want to be certain that we can make the next upgrade to all potential payment-making or payment-accepting devices, and that they all can communicate," the Visa chief executive said. "Let's all work together to achieve universal standards for complete interoperability and for privacy, ease of use, and consumer trust ... Not one of us will be able to meet these customer expectations and accomplish all this on our own. Collaboration is the key to creating this vision of the future."
Away from the public podium, Mr. Jensen said Visa and MasterCard historically accomplished interoperability in their own networks, have taken that to a new level in their chip specifications project, and can ensure banking industry leadership in new payment systems.
While he believes banks, through the card associations, are in "a good position to facilitate interoperability" for chip cards, Mr. Jensen said he expects it will result more from their payments expertise than from any cross-industry power play.
He wants to aim high, creating a technical framework that can accommodate driver's license, passport, insurance, health care, and other applications on one card.
"I have an idealistic vision, and we may never get all the way there, but banks have real opportunities in information services that go beyond the payment," Mr. Jensen said. "I'd like banks to be the principal providers of that information chip."
