Smart cards pay off for neither banks, merchants nor consumers. MAOSCO, a consortium of MasterCard, Mondex and six other smart card companies intends to change that, and banks could be the first beneficiary. Through MULTOS, a multi-application smart card platform, the consortium expects to cut the cost of smart cards by giving card schemes more uses. Smart cards using MULTOS will be distributed in early 1998.

Banks pay $3 and $5 to issue a smart card, compared to a $.20 magnetic stripe card. To justify that, financial institutions must create multiple applications for the cards to pay off. "MULTOS allows institutions to put credit, debit, electronic cash, even transit program applications on one card," says Nick Habgood, CEO of MAOSCO. Banks will also make money by helping merchants form loyalty programs for customers. Ultimately, multi- application cards will allow banks to build stronger relationships with customers by offering them more smart card-based services.

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