As smart cards begin to make their way into the hands of consumers, hopes are being revived among some technology promoters that people will soon use chip cards to buy goods through televisions with Internet connections.
The vision of t-commerce, or television commerce, has been out there for a while but has failed to be realized for various reasons. Now, however, some of those reasons the scarcity of smart cards and other necessary equipment, lack of bandwidth, and the Internets novelty are less powerful, and efforts are afoot to try to whip up interest.
At the center of those efforts is Mondex International Ltd., the London-based subsidiary of MasterCard International that markets stored-value smart cards worldwide. Mondex and FutureTV Inc., a London software company, announced in November that they were creating a service to let cable operators turn set-top boxes into home ATMs. People in participating households would be able to buy products, order movies, do home banking, and send electronic cash to and from a smart card.
So far, progress has been slow. Executives at Mondex and FutureTV say they are quietly calling on cable and satellite television companies and other industry suppliers but that they do not expect the service to become available to consumers soon.
Unfortunately, as tantalizing as t-commerce may be, the version being peddled by Mondex and FutureTV marries two technologies with track records of failing to spark much consumer interest: stored value cards and Internet televisions.
Mondex, which markets cards that store cash value on a chip, was seen as a dominant industry force when MasterCard bought it in 1996. Seven major U.S. financial services companies including Citibank, the former Chase Manhattan, Discover Financial Services, and the old Wells Fargo & Co. formed Mondex USA in the United States, and some of them began testing stored value cards.
But in various U.S. tests, the cards did not catch on. Nowadays they have been eclipsed by the multiapplication smart cards that include credit and debit functions on the chip but no stored value. Both MasterCard and Visa are promoting this type of card worldwide; in the United States, at least, MasterCard seldom makes noise about its Mondex subsidiary.
Meanwhile, the FutureTV concept of a television set that would let people toggle between watching their favorite shows and surfing the Web was introduced with fanfare in 1995 by WebTV Networks Inc. in the United States. But WebTVs popularity did not meet expectations, even after Microsoft Corp. bought it in 1997.
FutureTV ran tests last year in Spain and Ireland of its set-top box system. But the tests were focused on targeted advertising and did not include Mondex. Lack of enthusiasm for its set-top box prompted FutureTV to scrap deployment of its hardware and focus exclusively on software.
This history does not deter executives at Mondex and FutureTV, who consider their product ready for cable operators.
The set-top box can be used as a transaction gateway, said Norma Hughes, senior product manager at Mondex in London. There is a whole raft of different propositions that are attractive to the operators.
If people are using smart cards and televisions to buy goods and order pay-per-view entertainment, companies can easily track loyalty points through the cards and store the holders viewing patterns. The smart cards would be used to order programming, using software from FutureTV, and this would also help operators sell products through interactive advertising, such as electronic coupons.
To woo cable and satellite TV operators, Mondex also touts the ability of smart cards to streamline billing, with people eventually paying for all services electronically, at home, and a la carte. Moreover, FutureTVs software and Mondexs smart cards could keep track of each family member individually and make sales pitches accordingly.
For example, one household member, a football fan, might get electronic coupons good for viewing local games. Another, who watches a lot of home improvement shows, might get offers for discounts at nearby hardware and home-improvement stores.
The potential for cross-selling makes the system a valuable tool for the home, said Chris Travers, chief executive officer of FutureTVs Americas division.
Though the concept of interactive TV is not new, cable TV operators have consistently shied from investing in the technologies needed to make it work. But some industry executives say that cable operators, facing stiffer competition from satellite television companies, have become more motivated to offer new services.
Everybody is in the game to improve the set-top box, said Steven Muratore, editor-in-chief of Smart TV magazine in Chico, Calif. In a limited way, smart cards are already used by the cable television industry. There are 10 million in circulation in the United States being used in digital set-top boxes, but they are used for conditional access, not payment, according to Mr. Muratore.
Nevertheless, the television industry is gravitating toward adoption of smart cards. Several set-top makers are already shipping digital boxes with a slot that would ultimately accept some form of smart card. Georgia-based Scientific Atlanta, a major set-top provider, has shipped digital boxes that would let cable operators deploy a bevy of applications, such as e-mail, Internet access, and video-on-demand.
With interactive TV, the challenge for smart card developers is to get cable operators to start deploying the technology. But it is expensive to give cable subscribers new boxes with smart card readers in them, so cable operators have not rushed to do so.
They clearly have interest in deploying digital boxes, said Patrick Gauthier, senior vice president of smart card applications and market development at Visa U.S.A. in San Francisco. But when you look at how they are voting with their money, they are still very conservative.
Mr. Keenan, a former American Banker reporter, is a freelance writer in New York.
