MasterCard International is getting into the ticketless travel game with its smart cards.
The Purchase, N.Y., bank card association has teamed up with Household International, American Airlines, and Carlson Wagonlit Travel for a corporate smart card that customers will be able to present at airport gates for instant boarding.
For the past year and a half, the Carlson agency and Household have offered a joint corporate card with standard magnetic stripes. Next month they will issue chip-embedded versions to 200 business travelers-primarily MasterCard, Household, and Carlson Wagonlit employees.
Using the new cards, travelers without paper tickets will be able to board American Airlines flights at 90 U.S. and Canadian airports at gates equipped with chip readers. Passengers will receive immediate seat assignments, Carlson Wagonlit said.
The pilot is piggybacking on the fast-growing corporate card market, which is expected to make use of chip cards' ability to store and transmit more information than can magnetic stripes. "It is part of a general move around the world to recognize a multi- application smart card as a powerful device for corporate travel," said Jerome Svigals, an electronic banking consultant in Redwood City, Calif. He called corporate cards "an exploding market."
For example, General Electric Co. alone spends $5 billion a year in corporate purchases, Mr. Svigals said.
"We have an evolving marketplace and some successful card technology," said Patrick J. Coll, managing director, Household Credit Services.
And recent advances promise to make chip cards easier to use and more prevalent, he said. "We're looking into maintaining heavy involvement with the development of smart card technology," he said.
Household is among the largest issuers of corporate cards, with 200,000 accounts, Mr. Coll said.
Most major airlines have electronic ticketing programs that use magnetic stripe readers. Lufthansa, the German airline, has had a smart card program for six years, and American Airlines began a trial last October with American Express, the overall leader in corporate card issuance.
American Express also recently announced a test with International Business Machines Corp. and Hilton Hotels Corp. using smart cards to automate hotel check-in.
Mr. Svigals said Lufthansa has issued 300,000 chip cards to frequent fliers. Some cards have more features than others, and the most recent card-of which 10,000 have been disbursed-has nine functions. They include air travel and car rental capabilities and standard MasterCard and Visa credit lines.
"We are trying to focus on the consumer's receptivity to smart card technology in the travel and entertainment process," said Alan A. Brown, vice president of global corporate products at MasterCard International.
"We are focusing on the airline application, but in the long run we obviously are going to focus on hotel applications, electronic expense reporting, and other things that are going to add value to this particular product set."
Airlines are looking to electronic ticketing for "a tremendous amount of savings," said Dan A. Cunningham, senior vice president of business development, Phoenix Planning and Evaluation, Rockville, Md. "Processing the paper is the big thing. It is a much higher cost than processing a check."
Aside from eliminating ticket-printing and handling, smart cards can please customers who dislike standing in ticket lines, said Don K. Langford, manager of automation development at American Airlines in Dallas.
"Customers tell us they like self-service programs," he said. "It's like the automated teller. Few people go inside the bank anymore. People are interested in ticketless travel."
