NEW ORLEANS - Smart cards came alive this month at the Bank Administration Institute's Retail Delivery Systems Conference.
For once there was less talk about the long-anticipated technology and more action in the form of demonstrations in the exhibit hall.
If that action is to be believed, then plastic cards with computer chips inside are on their way to playing a major role in consumers' day-to-day payment habits.
As touted by the MAC network in one of the conference's most prominent exhibits, chip cards can replace cash in routine, low-value transactions at vending machines, highway toll booths, telephones, and transit systems.
Deposit and Withdraw
MAC, a unit of Electronic Payment Services Inc., which operates one of the nation's biggest automated-teller-machine and point-of-sale networks, teamed up with Interbold to show how the cash value stored in the chip cards can be withdrawn at an ATM, or, alternatively, replenished by transferring funds from a bank account.
Also in the MAC area - along with a soda machine, a postage-stamp dispenser, a newspaper vender, a toll-collection terminal, and a card-activated telephone - was a compact card reader that, when hooked up with a telephone, could serve as a portable bank and payment system. The manufacturer is VeriGem, a joint venture of Verifone, the U.S. point-of-sale systems supplier, and the French smart card maker Gemplus.
Wave of the Future
"The prepayment card is coming to the U.S. in a big way," Donald Gleason, head of what Delaware-based Electronic Payment Services calls its smart card enterprise, told one of the conference sessions.
He said preliminary consumer research indicates a strong interest in a card with value stored in its chip, suitable for transactions under $20 that can be completed with "no PIN [personal identification number] or waiting time" typical of the credit card authorization process.
"No one has tried to automate cash before," Mr. Gleason said, noting that 80% of all U.S. monetary transactions are in cash, and 75% of those are for $2 or less. "We're trying to retain a piece of the payment system for the banking industry."
Electronic Payment Services is a joint venture of CoreStates Financial Corp., Banc One Corp., PNC Bank Corp., and Society Corp., with National City Corp. soon also to take an equity position. MAC, the largest U.S. network in transactions through its switch, has 1,455 participating institutions.
American Telephone and Telegraph Co., which developed its version of the smart card 10 years ago, announced its first consumer banking application.
AT&T entered what it termed a strategic alliance with Chemical Bank of New York. In an initial test early next year, Chemical workers will be able to transfer cash value from their bank accounts to the card, which can then be debited in a cafeteria.
"Based on the success of that program, we expect to have smart cards out to some of our customer base before the year is out," said Ronald Braco, Chemical's senior vice president for electronic banking.
Unlike most smart cards - including the Gemplus product MAC is using - which require direct contact between the chip and a reading device, the AT&T card is "contactless." To be debited, the card needs only to be close to the point of transaction.
No-Stop Toll Payment
The technology is already in use in a variety of settings. On an Orange County, Calif., toll road, drivers who place the smart card in a reader on their dashboard have their payments debited without stopping. The reader transmits information to the toll station via radio waves.
The contactless technology is also part of an employee-identification and building-access control system in Japan. And the Italian government has begun to use the AT&T cards for retirement benefits.
Mr. Braco said Chemical has been keeping track of smart cards for years, "though we have been quiet about it." The contactless approach is attractive, he said, because it is highly secure, offers "more durability, and can be used in a variety of applications."
Long, Close Ties
"It all boils down to where the technology will be long term," he said of the decision to align with AT&T. He also pointed out that Chemical Banking Corp. has long had close ties to AT&T and its subsidiary, NCR Corp. "The strength of those companies, their networking and other expertise certainly work in their favor," Mr. Braco said.
Diane Wetherington, president of AT&T Smart Cards, said the contactless technology was developed for European pay-telephone systems that had to withstand harsh, outdoor environments. A key to the smart card's durability is the fact that it has no moving parts, and it can easily coexist with the current card-reading systems based on the magnetic stripe, Ms. Wetherington said.
"We are finding ways to change the way we deliver services, and we see the smart card as the cornerstone for a lot of that," Mr. Braco said. "We intend to move forward dramatically. The technology is there and the applications are more and more apparent."
The Retail Delivery Systems show also had some new bells and whistles for automated tellers.
Diebold Inc., the partner of International Business Machines Corp. in the Interbold ATM venture, was showing a security enhancement it calls "picture in picture."
Using the split-screen technique, the bank's security camera could allow customers to see what is happening around them via an inset on the ATM's screen. If the camera shows someone suspicious in the background, the customer can end the transaction and perhaps have the ATM "eat" the card.
Still in the demonstration stage, the digitized picture in picture may be an answer to ATM security, problems in large cities, where there is heavy pedestrian traffic and concerns have been raised about customer safety.
Undaunted by the dominance of Interbold and NCR in the U.S. automated teller machine market, a leading French manufacturer has decided to take them on.
Dassault Automatismes et Telecommunications, which has been manufacturing self-service banking terminals for more than 20 years, exhibited a full range of ATM products but gave special prominence to its D 224 compact cash dispenser.
"We see this as our entry product in the U.S.," said Eric Bernardini, a Dassault executive based in New York. "We have had a lot of interest, and we have been marketing this here for only two months."
Mr. Bernardini believes the terminal can help address the growing demand for banking machines inside branches or in nontraditional, remote indoor locations where volumes of routine transactions are high.
Dassault also offers ATMs with more comprehensive transaction functions, for freestanding or through-wall installations. Because the company operates in France, it is ready for the smart card, which is standard technology there.
Triton Systems of Pass Christian, Miss., displayed its line of mini-ATMs.
The Compact terminals are said to be able to bring electronic banking to virtually any retail location at a fraction of the cost of a full-service machine.
The terminals operate like a standard ATM, except that they do not take deposits. Cardholders can get balance information, make withdrawals, and transfer funds. Instead of dispensing cash, the machines provide scrip, or vouchers, redeemable for cash at stores' checkout counters.
Triton Says the machines can work well not only in supermarkets but in fast-food restaurants, liquor stores, and entertainment centers.
Home banking was also hot, with companies like Microsoft and, in a joint venture, U S West and Electronic Data Systems announcing plans to deliver financial services to terminals in the home.
Newly upgraded versions of screen telephones were on view, such as U.S. Order's PhonePlus, which is manufactured by Verifone Inc.; the ScreenPhone 220 from Online Resources and Communications Corp., supplier to NationsBank's home banking program in the Washington-Baltimore region; and the Philips Screen Phone from Dutch-owned Philips Home Services, which Citicorp helped develop and test.
And then there was a new entry, Loop Telecommunication International Inc. of Taiwan. It was exhibiting two phones with liquid crystal display screens: the C-phone that communicates with automated voice response systems; and the I-Phone, which links directly into a bank computer system.
Wendell Y. Lee, vice president, said the I-Phone will be priced in quantity under $200, competitive with the other screen phones. "You can expect to hear about us early next year," he said. "One of the regional Bell operating companies is ordering some of our units for a trial.