Two abbreviations that are old-hat in Europe but new to much of the banking world may hold keys to unraveling the marketing mysteries of smart cards.

GSM and SIM, buzz terms from the wireless telephone industry, have come to symbolize for many the long-awaited promise of a new wave in payment automation. In these types of phones, chip technology meets wild popularity.

Electronic commerce enthusiasts are beginning to talk about a subset, mobile commerce, and are rallying in a Global Mobile Commerce Forum. By the estimate of Logica PLC, which trademarked the term, "m-Commerce" is likely to exceed $4.5 billion in Europe in 2000. It may just be a killer app, or something close to it.

Several European technology companies showed last week at the Cartes '98 trade show in Paris that GSM and SIM can add up to a bank in the pocket.

GSM-Global System for Mobile communications-is the technical standard governing well over 100 million pocket phones distributed worldwide since 1992. The vast majority are in Europe; two million operate in the United States.

SIMs are Subscriber Identity Modules, often in the form of smart cards, which authenticate the users and enhance digital security.

With Europe moving toward its single currency, the euro, and GSM/SIM phones becoming standard personal equipment, a fully portable, on-line payment system might fall into place that goes beyond what even some futurists have contemplated.

Olivier Harry, director of financial applications for the multinational technology group CAP Gemini, said consumers ultimately could be charged for retail purchases on their monthly phone bills.

Gemplus, the French company that leads the world in chip card production and is a major SIM supplier, joined forces last week with phone maker Alcatel and MasterCard International's Mondex subsidiary in announcing what they called the first pocket automated teller machine.

They promised to deliver the capability in the first quarter next year to load money from a bank account on to a Mondex chip card inserted in a GSM phone slot.

"Increasingly, people want access to their money anytime, anywhere, and the combination of Mondex with GSM mobility meets this very real consumer demand," said Peter Hill, chief technology officer of London-based Mondex International.

Three other companies are also working on a "mobile commerce solution." De La Rue Card Systems said it would supply its SIMphoniIC (IC stands for integrated circuit) tool kit, Logica its server software. Motorola Inc.'s cellular subscriber group is contributing phones with two slots, one for the SIM card and the other for a payment card or similar device.

In contrast to the tenor of United States smart card events, where people gingerly discuss "business cases," or lack thereof, these allies cut to the chase.

"The business case is very strong," said Logica m-Commerce product manager Ian Glover. "Mobile operators and banks will enjoy improved rates of customer acquisition, retention, and average revenues."

"Personal mobile access to electronic commerce will speed up the rollout and adoption of smart cards," said Joachim Hoffmann, Motorola's director of mobile commerce business for Europe, the Middle East, and Africa. "This solution is the catalyst that will likely ignite the market and smash current industry forecasts."

Gemplus claimed some credit for proposing and promoting a multicard- reading telephone standard to ETSI, the European Telecommunications Standards Institute. Visa International said last week it was offering to ETSI its specification for remote loading of applications on SIMs using Java, the Sun Microsystems Inc. technology on which the Visa Open Platform smart cards are based.

Visa senior vice president Philip Yen portrayed the move as "not competing on standards" and "sharing our work with other industries to ensure true, global standards are developed. ... A common technological base will provide a greater opportunity for the banking industry to work with the telecommunications industry to offer joint services."

Patrice Peyret, director of Sun's consumer and embedded division, hailed the initiative as an endorsement of open standards and a case of "not reinventing the wheel."

But as is the smart card norm, there were subtexts of uncertainty. Mondex prefers its Multos operating system's approach to application loading, and there are others. And Microsoft Corp., just launching its campaign to sell Windows as a card operating system, indicated GSM was not an immediate priority. Sun and Java could find GSM a new route of attack on Windows.

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