MasterCard International and American Express Co. presented a demonstration at the CardTech West conference this week in San Jose, Calif., to prove that smart cards from different issuers and manufacturers can be accepted by a single terminal at the point of sale.
The two rivals may not have collaborated on such a project since magnetic-stripe terminals were widely distributed more than 10 years ago. They have now agreed to show a unified front on the issue of "interoperability," which they and other smart card advocates view as crucial to the success of the advanced payment cards.
The two companies have been working together on the project since last December.
Verifone Inc. and Dassault Electronique, two terminal manufacturers, and Solaic and Orga Card Systems Inc., two smart card producers, collaborated with MasterCard and American Express to bring the new technology to the public.
"It's the logical progression from magnetic-stripe technology," said Robert J. Wesley, vice president of international business development and worldwide smart card development for American Express.
He added that American Express is involved in many smart card programs and associations, including the Smart Card Forum, and is actively developing pilots, which he declined to elaborate upon.
Even so, the company announced on Wednesday that it changed the name of its Travelers Check Group to the American Express Stored Value Group, with the intention of issuing prepaid cards - not necessarily chip-based cards - that complement its market-leading paper-based product.
Mr. Wesley contended that merchants will not readily adopt smart cards - plastic payment cards with embedded computer chips - unless one terminal accepts them all.
"Obviously, since our card is accepted around the world, it's logical that we work with the industry to ensure this can occur," he said.
Meanwhile, MasterCard, its European affiliate Europay, and Visa International have been working on common specifications for chip cards in a project known by their initials - EMV. The program with American Express "goes beyond the scope of the EMV work," said John Tunstall, MasterCard's vice president of card accepting device development for chip cards.
He explained that several chip card applications will be able to operate on one terminal, and the security of each application will be safeguarded within the terminal through so-called firewalls.
"The whole point of the demo is to illustrate that one application cannot interfere with another," said Mr. Tunstall.
He said the work will be introduced to the EMV group. "We're not doing this in a vacuum," said Mr. Tunstall. "At some stage this had to be done for the industry - we're building on the EMV work."
But Visa International's executive vice president of payment technologies, Peter R. Hill, said MasterCard is "doing something we got accomplished five months ago."
He said Visa worked with Verifone, its terminal-making competitor Hypercom Inc., and card manufacturers Schlumberger and Gemplus to accomplish the same goal. "We were by far the first party to demonstrate interoperability with different vendors' cards and terminals," though another card issuer was not involved.
Still, he said, "We all want terminals to operate across all card brands."
He said Visa's implementation specifications allow for processing of multiple applications on one card, such as credit, debit, and shopper- loyalty programs. Firewalls in the terminal are similar to what MasterCard and American Express displayed.
Mr. Hill said a British organization has decided to implement Visa's specifications for smart card terminals to accept all brands. Mr. Hill called that far more significant than a demonstration.