January will mark the 25th anniversary of the first large tests of plastic cards with the magnetic stripes that have become standard for banking and financial transaction industries worldwide.

Today, well over one billion magnetic-stripe cards are produced annually, and more than two billion are in use at any given time.

The original test involved 15,000 American Airlines and 15,000 American Express cards to provide self-service ticketing at the American Airlines terminal at O'Hare Airport in Chicago. The American technical standard used in the test was later adopted as the international standard for bank cards.

The test was a success in many ways. Customers liked and used self-service ticketing. They walked great distances to use the machines and beat the counter lines.

The airlines liked the idea. The age of big planes and overcrowded terminals was just dawning.

American Express liked the promotional value.

Card suppliers got confirmation that their magnetically encoded payment devices could perform economically and reliably.

International Business Machines Corp., which funded and ran the test, got confirmation that magnetic-stripe cards could operate effectively in on-line terminals and communications networks.

As project manager at IBM, I had requests from several major banks to join the test well into its three-month duration. Obviously, they surfaced too late. A few enlightened bankers wanted to move quickly to adopt the standard, led by Richard Cooley, a former Wells Fargo & Co. chairman who was then head of the American Bankers Association's electronic funds transfer committee.

Within two years, IBM announced an entire banking subsystem, the 3600, using stripe technology for cards, passbooks, and employee badges.

The broad industry move to the stripe overcame an attempt by Citicorp to sell the industry on a competing low-density optical technology it developed, known as Magic Middle. Nobody followed Citi.

It was automated teller machines that really solidified the magnetic stripe's place in the banking system. To this day, they lead the United States in terms of transaction value, volumes, and market penetration.

Clearly, the stripe has had a major impact on the banking industry. But our experience with it teaches several lessons.

First, bankers tend to lag in using new technology, but once they adopt it, they go all out.

Second, card users want convenience, results, and progress. They don't worry about technologies.

Third, the bank card associations -- which took several years to get behind the stripe and also delayed in embracing its successor, the microcomputer chip, or smart, card -- are often too busy working on bureaucratic details to watch or invest in new solutions.

On the other hand, new technologies bring important benefits. They are worth fighting for, as we will learn with smart cards, now moving slowly and steadily forward after years of resistance.

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