Card Frontiers: Motorola, French Firm Planning More-Secure

Two leading computer chip manufacturers, Motorola and SGS Thomson, are building more security into smart cards that don't require contact with a reading device.

Such cards have not been regarded as secure enough for banking.

Chips that the two companies expect to make available by mid-1997 will have microprocessors capable of storing digital signatures and other security elements. Motorola, of Schaumburg, Ill., said its chip will function with readers that require contact as well as those that don't.

Contactless cards are favored by the transportation industry because they allow customers to pass rapidly through turnstiles and gates. Banking and retailing are typically contact functions.

"We believe we have the key enabler to allow transportation and the finance sector to come up with exciting new relationships," said Barry Hochfield, Motorola's Scotland-based worldwide marketing manager for contactless smart cards.

SGS Thomson, of St. Genis-Pouilly, France, is working with Innovatron Industries - a French company founded by smart card inventor Roland Moreno - to develop a contactless card with security based on contact technology.

The combination of contact and contactless functions is expected to allow for crossovers between the banking and transportation industries, among others. They could aid transit agencies in their drive to automate fare collections, while yielding transaction fees for banks.

Contactless cards are expected to reach 250 million by 2000. While that will be a small portion of the projected three billion chip cards, it is still regarded as a sizable niche.

Others are vying for a piece of the action. Racom Systems Inc. recently announced a contact-contactless chip. It is being promoted to the financial and transportation sectors through Transcash, a partnership with Perot Systems Corp. and GFI-Genfare.

Siemens of Germany, another big chip producer, announced its Combicard at the Cardtech/Securtech conference in Atlanta last May.

While the combination chip opens up new business opportunities, Dan Cunningham, senior vice president of Phoenix Planning and Evaluation Ltd., Rockville, Md., said the cards' cost, at 1.5 to 1.75 times that of contact cards, could be an obstacle.

Given the roughly $4 cost of a contact chip card, he said, a combination card could go for $6 or $7. But he added that as demand rises, the price will come down.

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