Smart card evangelists are increasingly convinced that they are no longer preaching just to the converted, and that the long-awaited breakout of the technology is at hand in the United States.

Their convictions were palpable last week at the seventh annual meeting of the Smart Card Forum in Washington, where more than 300 people had a lot more to talk about than the wishful thinking and hopeful projections of years past.

Of most interest to the forum's large banking and financial services contingent was the introduction two weeks earlier of American Express Co.'s Blue card, described by an executive of that company as "the first mass issuance of smart card credit cards in the United States."

Several speakers at the conference referred to that as a watershed. One of them, outgoing Smart Card Forum chairman William J. Barr, said that along with Microsoft Corp.'s aggressive promotion of standards for the technology as well as its own Smart Card for Windows operating system, the introduction of Blue has created a momentum never before seen on these shores.

Coincidentally, Mr. Barr, of Telcordia Technologies, turned the chairman's reins over to F. Allen Gilstrap, a leader of the team that spent the last several months developing Blue.

"The smart card industry in the U.S. has reached a turning point," said Mr. Gilstrap, vice president of smart card technologies at American Express. "Over the last six to eight months, there have been significant changes."

He cited a "global convergence of standards" as the most significant change. "Amex is a very conservative company," Mr. Gilstrap said, "yet we are convinced there are enough standards" to launch a smart card for the consumer market.

A presentation on the Blue card by Mr. Gilstrap and another American Express vice presidenmt, Martin Wittwer, which was not on the pre-printed program for the Smart Card Forum meeting, essentially stole the show. Organizers cleared the schedule for a half hour so that no other sessions conflicted, and the audience was left hungering for more.

Mr. Gilstrap and Mr. Wittwer revealed only the barest outlines of their plans for the chip on the Blue card, which at 16K of memory will be able to do far more than its first, publicly revealed task: storing a digital certificate so that cardmembers can authenticate themselves to an electronic wallet server.

The new card, now being advertised heavily to U.S. consumers, represents a departure from the mostly small, limited-risk pilots that, in contrast to some European and Asian efforts, have characterized the North American smart card experience.

Though the banks' MasterCard and Visa associations have been active on the smart card front on all continents, industry observers expect them to react competitively to the American Express initiative, and perhaps begin to rouse the U.S. banking market.

"This is the first major commitment by a card organization," said Dan Cunningham, president and chief executive officer of Potomac Systems & Technologies, a consulting firm. "It will precipitate responses by MasterCard and Visa."

Without tipping any strategic hands, Patrick Gauthier, vice president of smart card applications and market development at Visa in San Francisco, said Visa's research indicates that chip cards in the United States will increase 60% over the coming year, and bank cards' share of the chip card market will double. According to Visa, 19 million smart cards will be circulating in the United States by yearend, 31 million by the end of 2000.

"You will see significant announcements by Visa in the next year or so," Mr. Gauthier said.

Visa has announced plans to migrate its worldwide card base to chip over the next 10 years and has already started in several places outside the United States. Because the U.S. market is so large, its conversion to smart cards will not happen by geographical progression, but among distinct populations, such as college campuses or companies, Mr. Gauthier said.

Groundwork laid in certain segments -- including mass transit, campuses, cellular phones, and set-top boxes -- has helped contribute to smart card proponents' confidence. There are also government initiatives, such as one at the federal level to equip millions of workers with chip cards for payment, identification, and other purposes.

Mr. Barr cited statements coming out of Microsoft -- that it views smart cards today as being where CD-ROMs were four years ago -- as a spur to the market.

"It is assumed you have CD-ROM now" in personal computers, said Mr. Barr, executive director at Telcordia,. In Morristown N.J. A pronouncement like that from Microsoft helps explain "why we think things are getting different."

There is also the overlay of Internet commerce, and the Smart Card Forum in its educational programs is emphasizing the technology's ability to assure security and privacy.

"There is a disproportionate amount of fraud taking place on-line," Mr. Barr said. "If that continues, on-line merchants will be willing to invest in SET," the Secure Electronic Transaction protocol put forth by Visa and MasterCard, which requires a sophisticated level of cardholder and merchant authentication that can be well served by smart cards.

"We envision that authentication and identification requirements for electronic commerce will be strong drivers for the use of smart cards, and see that these technologies will be invaluable for companies that want to establish a powerful Internet presence," said forum president and chief executive officer Donna Farmer.

Mr. Wittwer, in his explanation of the American Express Blue card's "business rationale," cited research showing that 70% of Internet users have not yet made an on-line purchase, and 58% of Internet users said security and confidentiality concerns were the primary impediments to buying on-line. Though the new card is usable in the physical world because it is equipped with a conventional magnetic stripe, which the chip community has long regarded as insecure and outmoded, its marketing is clearly aimed at people receptive to Internet shopping and looking for an easy and secure way in.

Gilles Lisimaque, chief technology officer of Gemplus Group, the big French card manufacturer, said it is time for the industry to sell not security per se, but the "security of mind that the customer wants."

The industry is "changing from issuing cards to issuing applications," said Mr. Lisimaque, vice chairman of the Smart Card Forum. "I hope we are going to talk less and less about smart cards and more about applications."

Growth in the smart card industry is reflected in the forum's membership rolls. It added 47 members in 1998 and 1999, for a 36% increase. Sixteen new companies -- including MCI Worldcom, Oberthur Smart Cards USA, and Wachovia Corp. -- were announced last week, bringing the total to almost 200.

The forum is has long tried to bring together companies from many different industries, and Ms. Farmer suggested that recruitment is one of her priorities for the next year.

A newly formed work group focuses on the application of smart cards, public key infrastructure, digital certificates, digital signatures, and other authentication-related technologies. The ID and Authentication Work Group will help member organizations discover new business applications for smart card systems that enable secure electronic commerce, the Smart Card Forum said.

"Smart cards, carrying digital signatures and certificates, offer an approach to trust in the virtual world that integrates the familiar card form factor with the computing capability to provide strong authentication to the computers that are the engines of the Internet," said Ms. Farmer said.

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