Mondex has taken a significant step toward joining the nearing payment card industry's elite inner circle.

In cooperation with American Express and MasterCard, the British electronic cash venture helped demonstrate this week that all types of smart cards could be accepted at the same terminals.

Mondex - which is owned by National Westminster Bank of London and is being tested in several countries - was designed with technology that didn't conform to standards adopted by the credit card establishment.

The technical demonstration during the annual Cardtech/Securtech conference this week was the strongest indication to date that all the major chip-card brands can be "interoperable."

Interoperability is necessary to serve merchants who will require that a single terminal be able to process any card, said John Tunstall, vice president for card accepting device development at MasterCard International.

He said all major competitors - MasterCard, Visa, American Express, and Mondex - are committed to "one footprint" - that is, a single transaction device - "at the point of sale."

"The industry is ready to remove what is perceived as a major barrier to deploying smart cards," said Timothy Stewart, Mondex's regional executive for the Americas.

MasterCard and American Express have been collaborating on smart card interoperability for more than a year. They unveiled the technology at the Cardtech/Securtech West conference in California last November. The vendors Verifone, Dassault, Solaic, and Orga participated in that demonstration.

The addition of Mondex "provides an even more potent demonstration of multiple chip applications in one terminal," the card companies said in a joint announcement this week.

Visa has not been part of what is now a three-member group publicly proclaiming interoperability. But Mr. Tunstall downplayed the significance of that fact, pointing to Visa's involvement in efforts explicitly linked to interoperability - such as the global specifications known as EMV, agreed to by the Eurocard, MasterCard, and Visa associations.

Visa's plans to work later this year in a New York City smart card trial with MasterCard, Citicorp, and Chase Manhattan Corp. show that it is "moving in the same direction," Mr. Tunstall said.

"The lessons we've learned" with American Express and Mondex will be incorporated into the test in New York, he said.

He said MasterCard and American Express got together first because they are both based in New York. They intend to share their results with the entire industry he said.

The day after the three-way demonstration, which included the same vendors that participated in November, Visa International senior vice president Una Somerville stressed that all are on the same track.

"We're for interoperability," she said. "We're all trying to achieve the same thing."

Although a Verifone terminal used in the demonstration this week accepted all three cards, there are still some operating differences that could cause confusion. For example, MasterCard and Mondex require the customer to start the transaction, by keying in the payment choice. In contrast, store personnel must initiate American Express transactions.

"Over time, as these cards become common, these differences will diminish," said Mr. Stewart.

"The emphasis is on making it simple for everyone, as well as low cost," said Walter Murphy, program director in Verifone's smart card group.

But with more applications, terminal prices could rise. Merchants might then have to decide how much they were willing to pay and how many cards they would accept, said Mr. Tunstall.

The software shown this week is still in an experimental stage and not yet for sale.

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