National City Corp.'s Stored Value Systems Inc. has put smart cards into the hands of public school students in Kentucky.

A pilot program in the Louisville area allows students to pay for school lunches, books, and other supplies with smart cards instead of cash.

The program was developed by Stored Value Systems' vice president John Bianco, who contacted the county school board and presented the project.

Giving parents control over how their children spend their money and boosting sales for school cafeterias, he said, has been well received. "We're cautiously optimistic," he said.

Stored Value Systems installed the school terminals, paid for the cards, and manages the program. Mr. Bianco said the project could be profitable if it "achieves penetration goals." He wouldn't say what those goals are, but he said they are 50% of the way there, only three weeks into the school year. Earnings will come from transaction fees paid by the schools and a $15 annual fee paid by parents.

"It's the most sophisticated smart card product we know of," he said.

The card has a purse solely for school lunches, with daily spending limits set by the parents, and another purse for school activities, books, and sundries, Mr. Bianco said. Parents can add value to the cards with a credit card or debit card by calling Stored Value Systems.

He said parents are paying for "peace of mind." Instead of giving children cash this product guarantees that the money will be spent on lunch.

A transaction is created, which debits the parents' credit or checking account. Funds are then sent electronically to the school's smart card system. When the child presents the card at any terminal, the value is added to it. Students can also recharge the card with cash at a cashier or student bank.

The system tracks each transaction, and cards can be replaced if lost or stolen - a provision that was considered mandatory by the school system.

Six thousand middle and high school students at five public schools are eligible to receive cards. The program will be expanded if it is successful.

The project indicates that Stored Value Systems "is keeping all its technology options open," said Benjamin Miller, chair of the CardTech/SecurTech conference.

The bank-owned subsidiary recently lost a senior vice president, Joseph Schuler, because he was concerned that the company was focused on magnetic stripe programs instead of smart cards.

Stored Value Systems has indicated that it will employ the necessary technology for a project, considering cost, functionality, and security.

The company implemented smart card-based programs for delivering food stamps in Wyoming and Ohio. The Ohio program will become statewide in the first quarter of 1997. Mr. Bianco said it will be the largest smart card program in the country, with 500,000 recipients accessing benefits.

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