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The splashy unveiling of the card this month, complete with a kickoff rock concert and multimedia advertising blitz, only hinted at what American Express has in store for the smart chip on the card and its ability to link to the Internet, two executives of the company said this week.
That was about all that the two officials, F. Allen Gilstrap and Martin Wittwer, were willing to reveal in a presentation to the Smart Card Forum's annual meeting. They said they did not want to steal any of the marketing thunder that Amex hopes to generate in about four weeks, when a new set of product features is to be announced.
But appearing before industry peers for the first time since Blue's introduction, the executives tantalizingly indicated that American Express intends to be the first to do, on a mass-consumer scale, things that many U.S. bankers have been exploring only tentatively, if they have been thinking about them at all.
These revolve around the multiple-application capability of the computer chip in the card, a digital certificate in the chip for authenticating the cardholder in electronic transactions, and a digital wallet for simplifying on-line shopping and payments.
Still held close to the vest is the full array of services that might be loaded on the chip, which will run on the Multos operating system originally developed by MasterCard International's Mondex subsidiary. American Express licensed Multos and is a co-owner with MasterCard and several others of the system's governing consortium, Maosco Ltd.
Mr. Wittwer, the American Express vice president responsible for smart card business development, refused to answer such questions as whether cardmembers will be able to register multiple credit card accounts -- not just Blue -- in their digital wallets. These virtual, on-screen representations of personal data and payment information will be based on technology from GlobeSet Inc., a spinoff of the former Bankers Trust Corp.
American Express plans "additional functionality" for the card, Mr. Wittwer said, which entails delivering small software applications, or applets, to the chip after the cards are in consumers' hands. American Express also intends to use the technology to enhance the merchant point of sale, but again Mr. Wittwer remained vague.
The timing and the promise of additional features suggest that American Express wants to make its marketing impression in time for the Christmas shopping season. Mr. Wittwer said the emphasis is on credit and the digital wallet and he denied that an electronic purse, or virtual cash, is part of the current plan. American Express is a licensee and part owner of the Proton stored value technology, which could be an application on the Multos operating system.
He was more specific on the "business rationale of Blue," particularly addressing the public's hesitancy to fully embrace Internet shopping. He cited research showing that 70% of U.S. Internet users have not made any purchases and 58% say they have security and privacy concerns. Meanwhile, merchants report that 60% to 70% of intended purchases are abandoned before checkout.
American Express seeks to draw customers in with no annual fee, a 0% teaser interest rate, and a simple procedure for activating the electronic wallet using a smart card reader plugged into a personal computer's serial port. The reader is to be available in November, free to cardmembers until Jan. 31 and $25 thereafter.
Mr. Gilstrap, vice president and technology leader for smart cards in the American Express Technologies unit, based in New York, described the project as "the first mass issuance of smart card credit cards in the United States."
Mr. Gilstrap has just taken over as chairman of the Smart Card Forum, an international group that promotes development of the technology and exchanges of views across various industries and the government sector.
Several participants at the forum's seventh annual meeting said they saw the Blue card as a seminal event in the evolution of smart cards, likely to provoke reactions and competitive responses from the bank card industry.
That expectation may have something to do with the Amex officials' reticence on certain details of execution. But there was also a good deal of cheering at the prospect that Blue could galvanize a modernization of card technology across the board.
William J. Barr, the previous forum chairman and its co-founder in 1993 with Catherine Allen, then of Citibank, called Blue "a watershed." Mr. Barr, who is affiliated with Telcordia Technologies in Morristown, N.J., said he wants to be careful not to repeat the kind of hype that caused unjustified optimism about smart cards in past years. "I don't think we have a tidal wave yet," he said, "but the surf's up."
"The American Express Blue card may be the event that accelerates smart cards," David N. Campbell, president and chief executive officer of a Chicago-based e-business company, Xpedior, said during the conference's opening panel discussion Wednesday. He praised the "giveaway" aspect of the marketing strategy, saying that the cost of a smart card and reader, which U.S. bankers have found hard to justify, may be negligible next to "the value of a customer."
Mr. Campbell likened the approach to the mass-mailing "carpet bombing" of disks and free subscriptions by America Online Inc. a few years ago. He said that helped drive AOL's market valuation from $2 billion to $100 billion.
Until last week, when he left for the startup Xpedior, Mr. Campbell was president of GTE Technology Organization, the advanced research and technology group of GTE Corp. that includes Cybertrust, the supplier of the Blue card's digital certificate system.
On Sept. 8, the same day American Express introduced the Blue card, Frost & Sullivan issued an analysis calling the product "a major landmark in the development of the smart cards industry in the United States and worldwide."
The Silicon Valley consulting and market research firm said American Express is the first U.S. company to "let the consumers decide" whether they want smart cards. "It's a full dive for Amex while Visa and MasterCard have only been putting their toes to test the U.S. waters," said Alyxia T. Do, smart cards analyst for Frost & Sullivan.
