Maybe smart cards are as hard a sell as they seem.

The invention is about a quarter century old, predating the personal computer.

Marketers, led by companies in France where it first took hold, have been on a hard sell for at least 15 years. Even in the United States, the market most coveted yet hardest to crack, experimentation dates back well into the 1980s.

But as annual shipments of cards with microprocessor or memory chips climb past one billion, something still isn't clicking. Despite pockets of significant interest and growth, notably in Asian countries where governments and private companies are jointly mobilizing for electronic commerce, smart cards still struggle for acceptance in the activities to which they seem most transferable - banking and payments - and in the world's biggest economic power, the United States.

Either this country is in danger of being bypassed by smarter adopters of progressive technology, or the rest of the world is ignoring at its peril the Americans' accounting of the high costs and questionable benefits.

It may just be a case of failure to find common ground and purpose. And until the world - or at least the banking and credit card establishment - finds a way to unite behind a strategy and bridge some of the technical and philosophical gaps dividing it, universality cannot be achieved and necessary investments will be deterred.

Still accoladed for its leadership is France, where the chip for years has been standard on plastic cards of all kinds. A national industrial policy gave smart cards an initial boost, and banking networks were able to pay for the infrastructure increment through a drastic reduction in fraud. France was plagued by an inadequate and costly telecommunications system that made transaction authorizations difficult or prohibitive - until chips put security in the cards.

The United States was an extreme opposite, blessed with cheap and low- cost communications. Instantaneous, on-line authorizations were a snap. Bankers here never bought a business case based on fraud, and except perhaps in the least developed countries of Africa and Eastern Europe, telecommunications deficiencies are rapidly being rectified.

So the search was on for "value-adds" for which cardholders, merchants, and others might pay enough to reward service providers with a profit. Much of the early attention went to cash replacement, the stored-value card. Some people like it, but again there is that bugaboo about the business case.

Catherine Allen, founder of the Smart Card Forum and chief executive officer of the Bankers Roundtable's Banking Industry Technology Secretariat, said it was a mistake to regard smart cards as anything but "an enabling technology." This does not by itself constitute a business.

"The real issues we face are business problems, not technology," said Diana Knox, Visa U.S.A. senior vice president for chip products. "It is a product in pursuit of a problem."

"In the United States, we are trying to uncover those market needs," said Ms. Knox. "No one will migrate to chip for payment alone. There is no business case, given the fraud rates."

The answer may lie in the right combination of services that can reside on a single card, taking advantage of the considerable capacity and flexibility of the microprocessor to manage various "zones" within the chip. This multiple-application capability has been demonstrated in, for example, a Lufthansa airline card that includes various payment options and links to rental car companies, hotels, and loyalty-point systems.

Customer loyalty, to some observers, is the killer app. Hang Ten, an Asian retailer, built loyalty concepts including, for promotional gifts, recognition of a customer's birth date in its cobranded smart card. The U.S. drug company Rite-Aid, not waiting for banks or anyone else to get their chip acts together, is launching an electronic gift certificate program on its own, with technology from Verifone Inc., among others.

Yet it costs, at best, $3 to $5 to produce a chip card with any degree of sophistication. A run-of-the-mill magnetic stripe card, backward but functional though it may be, costs 50 cents to $1. With plastic cards in circulation well into the billions, and the need to retool millions of usage points around the world, the cost differences mount.

Said the chief technology officer of a major U.S. bank, "I can appreciate all the wonderful things smart cards can do. But where are you going to get $3 billion to change the infrastructure?"

That argument has held sway since an abortive attempt by MasterCard a decade ago to lead the banking industry down the chip road. Since then, the bank card associations have geared up for chips, only to run into political disputes and some critical bashing for their failure to make the technology fly. They have been accused of being either too credit-centric or American- influenced.

Hatim Tyabji, who recently retired as chief executive officer of Verifone, said Americans have a "not-invented-here attitude. It is high time we dropped it."

He said the telecommunications argument is a "crutch" and "fraud protection is just the tip of the iceberg. If you look around the world, loyalty and other programs are coming into play."

The infrastructure issue has begun to be addressed by Verifone, its closest rival Hypercom, and other vendors that are currently shipping chip-ready or chip-adaptable terminals as a matter of course.

Phoenix-based Hypercom Corp. and its chairman, George Wallner, have been crusading for an economical solution called Chipstripe. Though he is not winning any popularity contests with the vendors of more sophisticated systems, Mr. Wallner contends the best way to ease the technology into the mainstream is by putting an elementary chip on conventional credit cards as a security enhancement. It could later evolve to multiple applications.

MasterCard, which took arrows in the back in the 1980s, is back bidding for leadership through its acquisition last year of 51% of Mondex, the electronic cash product with multiple-application operating system and an Internet component. Visa, basing its approach on what it claims is a superior "open platform" with the Java programming language, recently launched a consulting and support service to help its member banks make sense of the complexities and decide how to proceed at their own pace.

The card associations, despite disagreements, are together testing chip- card interoperability in New York City, with some 65,000 cards issued to Chase Manhattan Bank and Citibank customers in the Upper West Side neighborhood. But as has happened in virtually every chip trial in the western world, the press has been negative and even industry people who understand the need for "learning" want to move faster.

"Personally, I am tired of pilots," said Roger Bertman, Verifone's vice president of corporate development. "It's ready for prime time, and not just stored value, so let's do something."

"I tend to agree," said Tim Jones, the co-inventor and CEO of Mondex before he took his current job as chief of Natwest Group's U.K. retail bank. "But we also have to realize this is at least a five- to 10-year maturity cycle" and a "full-bore rollout in the society" is not in the cards.

"We have a product that operationally works, and we have to play to our areas of comparative advantage," which have to do with low off-line transaction costs, security features, and the ability to issue monetary value to minors who do not qualify for debit and credit cards.

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