The seven owners of Mondex USA have ambitious plans for 1997.

Wells Fargo & Co. and AT&T Universal Card Services - the two original stakeholders and now owners of 30% and 10%, respectively, of the smart card system - are furthest along. Wells has issued 800 cards to employees; AT&T, 200; and both plan to expand the pilots next year.

Chase Manhattan Corp., with a 20% stake in Mondex USA, had planned to begin testing MasterCard Cash on New York's Upper West Side by March, but its switch to Mondex will force a delay until the fourth quarter.

Even so, Janet Hartung Crane, president and chief executive of the joint venture, said, "In 1998, we will roll out" nationally.

Chase's pilot, with 50,000 cards and more than 500 merchants, would be by far the biggest.

Speaking last week at the Bank Administration Institute's Retail Delivery '96 Conference, where Mondex USA was officially unveiled, Ms. Crane, a Wells Fargo senior vice president, said Wells would expand its San Francisco headquarters pilot in 1997. The bank also plans to test card usage on the Internet, look for a cobranding partner, and install the technology on a university campus.

AT&T senior vice president Keith Kendrick said he expects to expand the test at his Jacksonville, Fla., headquarters in the second quarter, along with an Internet pilot, taking advantage of Mondex's ability to download value via smart phones.

First Chicago NBD Corp., another 10% owner, will begin testing in the third or fourth quarter with 200 headquarters employees and 12 merchants.

Dean Witter, Discover & Co. is "still formulating its plans," said William Simmons, executive vice president of its Novus Services unit. It is looking to get its feet wet on a university or corporate campus.

Ironically, Discover is now in bed with MasterCard - prospective majority owner of Mondex International as well as 10% owner of Mondex USA - despite Discover's thorny relationship with banks. John R. Mannion, a Novus director, noted that all the Mondex USA partners are fierce competitors.

Michigan National Bank - owned by National Australia Bank, a Mondex global founder - is planning a test at its headquarters beginning in late spring with a fraction of its 3,000 employees.

Still, winning over merchants and, thus, consumers may be difficult in the United States. The high-quality, low-cost telecommunications infrastructure that underpins magnetic-stripe card systems weakens the case for a costly conversion of point of sale terminals to smart cards.

At a BAI seminar just after the Mondex announcement, where Michael J. Shade, vice president of Verifone Inc., and Fred J. Stephens, manager of technology for Shell Oil Co., discussed the migration to smart cards, one observer called them "a solution looking for a problem."

Mr. Stephens said the investment, close to $60 million for his company, is hard to justify. While card executives argue that chip cards reduce cash-handling costs and transaction times, Mr. Stephens said it might require reduced interchange fees, personal identification numbers on credit cards to reduce fraud, and cost-sharing to tip the scales in smart cards' favor.

Other types of merchants will have other high-priced demands.

Visa U.S.A. and its partners in the Visa Cash rollout in Atlanta shared the lessons they had learned at the conference. Michael Love, a First Union Corp. vice president, said merchants are "interested in sales lift."

As for the business case, "stored value can ride the railroad, but it will not pay for it," said Richard F. Shaffner, executive vice president at NationsBank Corp.

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