The chief executive of the Smart Card Industry Association did not flinch when a similar group was being organized earlier this year.

She decided that in this age of alliances there was room for both her association and the apparent rival, the Smart Card Forum, and sought to be more of a complement than a competitor.

As a result, SCIA executive director Janet Sayles-Falls was allowed to take the podium at the recent Smart Card Forum annual meeting, where she promised to launch a campaign to sell the technology in official government circles, the health care industry, and financial services.

Conversely, the Smart Card Forum, which was organized by Citicorp and has members from several industries, has promised to explore joint educational efforts with SCIA. (The acronym is pronounced SKY-uh.)

The scenario would be quite different in a mature industry like, say, banking, where overlapping associations tend to consolidate when members grow weary of supporting them.

A Forceful Voice

And it helps for a group like the Smart Card Industry Association to have the forceful and articulate Ms. Sayles-Falls as spokeswoman.

"From my background in the electronics business, I know that a key to this economy and the growth of any business is having more than one entity supporting the industry," said Ms. Sayles-Falls, who has been at the Alexandria, Va., trade group full time since August 1992.

"SCIA was growing along with greater interest in the technology," she said in a recent interview. "Another organization came along essentially to promote market trials. That was not SCIA's mission or primary focus."

Some Overlapping Membership

The two groups are sending the message that together they can promote the widespread adoption of plastic cards with computer chips - something that no one association, supplier, or group of users has been able to do on its own.

To be sure, there is potential for less constructive conflict. SCIA has been around since 1989 and its members - primarily vendors of the chip technology - might look askance at the upstart Smart Card Forum.

Yet several of SCIA's 50 members have also joined the forum, which has about 60 members. The forum is up from about 25 in August and has a greater potential to grow because it also draws from the financial, computer, communications, media, and other industries.

The acting chairman of SCIA is Stephen Sherman, director of product management for AT&T Smart Cards in Somerset, N.J. The American Telephone and Telegraph Co. unit's chief scientist, Richard Mandelbaum, is a Smart Card Forum director and executive committee member.

Different Missions

Smart Card Forum director Dan Cunningham, president of Gemplus Card International in Gaithersburg, Md., also a member of both groups, said, "There is a place for both. They have different charters and are complementary."

They share some outward similarities besides their technology goals. Their members - similar in number - tend to be fast growing and independent minded. A SCIA survey showed its average member projects $2.3 million in revenue this year, up 46% from 1992.

And atypical of more established interest groups, each has placed women in key roles. While Ms. Sayles-Falls fronts for SCIA, Citibank vice president Catherine Allen leads the Smart Card Forum. Martha Rea, senior vice president of Payment Systems Inc. in Tampa, Fla., is the forum's interim executive director.

Small Impact So Far

Mr. Cunningham, who heads the U.S. unit of a leading French producer of smart cards, conceded that SCIA "has been relatively small in numbers and minimal in its impact." He ascribed that to "the newness of the technology."

"With increased emphasis on and interest in the technology, SCIA will have a greater impact," Mr. Cunningham said. "SCIA and the Smart Card Forum can work together to help educate the marketplace in the capabilities of smart cards and how they can be used."

A dissenting view came from a veteran industry observer, who spoke only on the understanding he not be quoted by name. Though he views Ms. Sayles-Falls as a savvy advocate, he said SCIA has not lived up to its potential as a manufacturer-led entity. He asked, "With the Smart Card Forum doing what SCIA should be doing, why do we still need SCIA?"

The forum, incorporated only this summer, may have gotten off to a faster start than SCIA did four years ago, but to Ms. Sayles-Falls it is a matter of timing.

She speaks of a technology that has already matured, with "the requisite critical mass of experience and pilot projects to move forward rapidly."

Thus it is time for education and marketing - the heart of SCIA's mission, and an assignment tailor-made for Ms. Sayles-Falls.

A native of San Francisco and a graduate of San Francisco State University in political science and psychology, Ms. Sayles-Falls, 46, moved into the high-tech community centered in Silicon Valley.

Silicon Valley Lessons

She spent 10 years in marketing with Hewlett-Packard Co. in the salad days of electronic calculators, where she saw the peril in "trying to shove too much technology too soon down the consumer's throat."

More recently, Ms. Sayles-Falls worked for the American Electronics Association and ran a conference management business. At SCIA she has two full-time and two part-time staffers. They are building lines of communication that will include an enhanced committee structure and an electronic bulletin board for members.

Ms. Sayles-Falls said she learned a cautionary lesson that she passes along to her more impatient constituents: "Look at what is most important and what the market can digest. Let consumers become comfortable with [an elementary level of] the technology before moving on to what is more grandiose."

Consumer Acceptance

"I remember how much early skepticism there was about whether consumers needed all the computing power we were able to deliver in a desktop calculator," Ms. Sayles-Falls said. "I see a similar type of skepticism today about smart cards and what can be done with all the information that one can have available in his pocket.

"But people are beginning to say they want to have all that information. They want to have control over it and be fully informed."

The challenge, she told the Smart Card Forum, will be to overcome consumers' "numbness to the wonders of technology. We must convincingly demonstrate to them the financial and time savings to be gained by using smart cards."

Ms. Sayles-Falls sees another heartening trend in the chip cards' economics. Their unit cost - at best, several times the 50 cents to $1 of conventional cards with magnetic stripes - discouraged the international bank credit card associations from adopting smart cards in the 1980s.

But the costs are coming down, and with the French banks having adopted the chip standard, MasterCard and Visa are taking formal steps to accommodate the technology if banks want to move forward. The French attribute a sharp drop in credit card fraud losses to the chip's higher level of security.

"I see these issues intersecting," Ms. Sayles-Falls said. "The cost of the cards is coming down, and the cost of fraud has gone high enough that the cost of the card becomes increasingly irrelevant."

Health Care Play

Despite what she and other smart card proponents see as compelling arguments for banking industry adoption, Ms. Sayles-Falls' immediate priority is the health care market. She hopes to capitalize on the reform debate, with its focus on government, private-sector, and payment-system streamlining.

"SCIA views health care as a major opportunity and has taken it on as a major objective for 1993-94," Ms. Sayles-Falls said. "We intend to make the case for smart card technology as the best way to protect the privacy of medical records, while offering patients more control over their files and more freedom in seeking alternate sources of health care."

Illustrating the card's privacy-enhancing capability, she said the chip memory can be divided into zones. Each can have a different level of security, "depending on the sensitivity of the information. This means the pharmacist could not get access to your most private medical test results, for example."

Working in Tandem

The interest in health care may put financial services on SCIA's back burner for now, but Ms. Sayles-Falls sees these applications working in tandem. And here the Smart Card Forum, with an active financial services working group headed by Chemical Bank vice president Ronald Braco, can take up the slack.

"The two major U.S. industries in which the smart card has the best chance of gaining momentum are health care and financial services," Ms. Sayles-Falls said. "These are the two areas in which information is most valuable and sacred.

"If the financial community is looking for heightened awareness of this technology solution, I could see a lot of health care applications that they could point to as an example. A good argument could then be made for migrating the technology to financial services." [TABULAR DATA OMITTED]

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.