Three technology companies have announced that they will jointly market smart card systems for automated fare collections.

Racom Systems Inc., Perot Systems Corp., and GFI-Genfare - a unit of General Signal Corp. - formed an alliance called Transcash. Its purpose is to provide an end-to-end smart card system for the transportation industry.

The system uses Racom's combination contact and contactless smart card; the latter can be read and debited on the fly, without being inserted into a terminal. That might be of interest to financial institutions seeking to add transportation applications to their electronic purse experiments.

Most transit applications require contactless cards "for speed of through-put" at the turnstiles, said Russ Broshous, vice president of transportation at Racom Systems in Denver.

He said the alliance will promote banking functions along with the combination card.

"We put together the Transcash consortium (to) address a major system installation serving transit, pay phones, and the banking community," Mr. Broshous said.

The goal is to reduce costs for all parties and get cards into the hands of more consumers.

The companies say Transcash will work with all types of transportation, including toll collection, mass transit, and parking. It would accommodate merchants, pay phones, parking meters, and other applications in which contact cards come into play.

Mr. Broshous said the Racom device is highly sophisticated because it uses a common microprocessor for both the contact and contactless activity. He said the cards provide high reliability, security, and speed.

GFI-Genfare, based in Elk Grove Village, Ill., is a leading provider of transit fare collection systems. It has installations in most major cities. Transit authorities would be able to upgrade their current systems, rather than replacing them.

Perot Systems of Dallas will provide data processing and system integration services, linking multiple transit applications in one metropolitan area through a clearing house.

Jerome Svigals, a consultant based in Redwood City, Calif., said the business proposition makes sense. With combination cards, he said, multiple issuers would "share the expense."

Though contactless cards are more expensive than contact cards, there is "no question" about the viability of the alliance, he said, adding, "It's just a matter of how quickly the economics become attractive."

Mr. Broshaus said the consortium will profit from card and equipment sales and transaction processing, and can reap benefits through float, funds-pool management, expired-card values, advertising, collectible sales, and interchange fees.

"It's a pretty substantial upside which we clearly intend to share with transit customers and other participants," Mr. Broshous said.

He said the consortium is in discussions with several clients, but no deals have been consummated.

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