If U.S. banks continue to hesitate with smart card technology, then international trends and competitive pressures may force their hand, Visa International president Malcolm Williamson said Tuesday.
In a speech to Carte '99, a major international card technology conference, Mr. Williamson estimated that the banking world is about a third of the way along in the evolution of chip cards, yet the United States remains woefully behind.
He said his conversations with and observations of U.S. bankers give him reason to hope that smart card acceptance will proliferate, bringing the Americans in closer alignment with the rest of the world.
But if that does not happen, he said, market forces and global interdependence will make the difference.
He defended the U.S. banking community for its business judgment in not being able to establish a strong business case for the advanced cards.
But he added that "the more progress I see towards smart cards in Europe, the more convinced I am that global adoption will accelerate. When the waves of progress pick up on one side of the ocean, they kick up a tide on the other."
Though Mr. Williamson has been a strong advocate of chip cards -- both as chief executive officer of Visa for the last year and as CEO of Standard Chartered Bank of London before that -- his remarks Tuesday were among the most pointed that he has made in public about the hesitancy of bankers in Visa's headquarters country.
Noting the irony of praising a competitor, he expressed approval of American Express Co.'s introduction of the Blue credit card with a smart card chip and said it would be "quite helpful" in putting "pressure on U.S. banks."
As he has in the past, Mr. Williamson spoke of the smart card as a key to maintaining and enhancing customer loyalty. "Essentially, the smart card is to the payments system what a browser is to the Internet ... and banks are in the best position to be the smart card 'portal,' delivering services from multiple industries to the consumer," he said.
One explanation for North America's slowness in adopting cards with embedded computer chips is that it lacks "the cross-border pull" of other regions.
"An American can travel 5,000 kilometers without leaving the country, converting currency, or doing business in a different language," Mr. Williamson said. "Europeans never had that luxury in the past, which makes any universal payment system more appealing."
He predicted that U.S. travelers in Europe and Asia who see ubiquitous card systems at work will begin to demand the same at home. "And when Europeans and Asians pull out their smart cards in the U.S., more and more American businesses will want to cater to them."
Mr. Williamson said "France is already there" with a national smart card standard, and in the United Kingdom, where 104 million debit and credit cards are being converted to chip, Visa expects all 30 million of its cards to be converted within three years.
For all of the European Union "we expect relatively full adoption within three to five years, while the conventional wisdom is that it may take up to twice as long in the United States," Mr. Williamson said.
"But conventional wisdom is just that -- conventional. We believe there are several dynamics at play that could significantly hasten the migration to smart cards."
Mr. Williamson made clear that he is personally campaigning for smart card support among senior bankers in the United States. Armand Linkens, managing director of Belgium-based Proton World International, a smart card venture co-owned by Visa, said Mr. Williamson is being pragmatic in "defining a strategic opportunity" that U.S. bankers will not be able to afford to wait long for. "He understands that American banks can miss a very important boat," Mr. Linkens said.
