Warts and all, the Smart Card Forum tried valiantly again last week to bring some sense and order to an increasingly frustrating struggle for market acceptance.

The occasion was the sixth annual meeting of the forum, which was born into an abundance of optimism fueled by a worldwide membership drawn from banking, government, telecommunications, entertainment, retailing, and the high-technology community.

The membership remains ample, at around 200 organizations and growing, and there are pockets of optimism about plastic cards powered with computer chips instead of the outmoded magnetic stripes still prevalent on credit cards and similar devices. But those most evident pockets tend to be not in the United States and not necessarily driven by the banks and payment associations that were expected to seize the day in the early 1990s.

So when a predominantly American sampling of the smart card community, with healthy financial industry representation, gathers 400 strong as it did last week at the Smart Card Forum session in San Francisco, more souls are searched and more dirty laundry aired than at the typical, formulaic business conference.

"We have the Internet, which has meant an explosion of innovation in this country," said a technology company executive, exasperated because smart cards have not yet found a role in on-line commerce and security.

The Smart Card Forum commissioned a survey from Find/SVP showing 31% of North American adults to be "potential early adopters." It was, on its face, an encouraging result, but forum president William J. Barr had no choice but to characterize it as "just the beginning" of an industry's education. And he vowed to focus the forum more on consumer and policymaker education as well.

Charles House, vice president at Dialogic Corp. after 30 years with Hewlett-Packard Co., reported results of a survey of people in the high- tech circles in which he travels. Many of the 48 people were in the dark about smart cards; the overall, unsurprising conclusion was "they are not there yet."

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Tom Kippola, managing partner of Chasm Group, an influential Silicon Valley consulting firm, said classic "chicken and egg" problems are festering unresolved.

Chasm Group, which takes its name from the technology evolution book "Crossing the Chasm" by Geoffrey Moore, advises innovators to focus on "compelling reasons to buy." But after spending most of a day leading what was supposed to be an edifying brainstorming session with about 15 Smart Card Forum leaders and invited guests, Mr. Kippola sounded lost at sea.

"If there were applications with compelling reasons to buy, I didn't hear them," Mr. Kippola said in a panel discussion recounting the group effort.

"Reality was reflected in the process," said Mr. Barr, who is director of information networking at Bellcore, Morristown, N.J.

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Hatim Tyabji, the retired chief executive officer of Verifone Inc. and a bona fide payment systems visionary, was appropriately upbeat for a keynote speaker and smart-card true believer.

He ticked off numerous inroads by the technology-national chip card rollouts in Sweden and Holland, sizable shopper loyalty programs in Australia and Brazil, and, in the United States, major commitments by the military, other government agencies, colleges and universities, sports facilities, and the Rite-Aid pharmacy chain.

Mr. Tyabji said he is convinced that smart cards are about to explode because of the prevalence of the Internet and generational and demographic shifts that will change all aspects of service delivery. He predicted "the automated teller machine as we know it (will be) obsolete" as cash is loaded via electronic channels onto chip cards.

"Electronic commerce, albeit embryonic, is clearly happening." Earlier assumptions were wrong, he said, because e-commerce is "not in isolation" from conventional forms. Rather, "the physical and virtual worlds are blurring. And the bridge between the physical and virtual worlds is, I submit, the chip card."

But at the end of his speech last Wednesday, Mr. Tyabji turned to deeper thoughts and causes.

"What we are lacking is that spark, the ability to break through a psychological wall," he said. The four-minute mile was such a barrier, Mr. Tyabji counseled. But Roger Bannister, who broke through it first, held the world record only 46 days.

"Records give way," Mr. Tyabji said. "Companies whose leadership seems invincible may not be. Leaders get overtaken, and not by those satisfied to be followers."

"With the velocity of change today, with information technology central to any industry, you have to be able to innovate and be first rather than second," Mr. Tyabji added. "This is no longer just nice to have. Being a technology innovator is not just the way to control one's destiny-it is imperative for survival."

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Chip card advocates are more focused on what is lacking in the area of standards.

"We need to get to a common technology platform," said Pete Hill, chief technology officer of Mondex International Ltd., London.

The sentiment is widely shared, on the theory that networks, brands, products, and applications will flower on a less confusing technical bed. Making it happen is something else again.

The Global Chipcard Alliance, a 29-company group just moving into high gear after adding banks and other financial organizations to its telecommunications core, has tried to commandeer the cause of interoperability. Its long-term goal is to allow any smart card to be used in any device anywhere. Emblematic of a closer relationship with the Smart Card Forum, the alliance sponsored a panel discussion on that subject at the San Francisco meeting.

Matt Scheuing, a vice president at U S West and head of Global Chipcard's interoperability committee, moderated the discussion and billed it as "somewhere between 'Wall Street Week' and 'Jerry Springer.'"

It had representatives from American Express Co., Citibank, GTE Corp., the U.S. Treasury's General Services Administration, and International Business Machines Corp. But most eyes focused on two men in the middle from bank-affiliated associations-Hugh Kingdon of Maosco Ltd. and Philip Yen of Visa International-whose advocacy of different operating systems has shown nary a hint of convergence.

Alexis Megeath, who oversees chip card pilots for American Express, which has signed on to both Maosco's Multos platform and the Proton system that Visa and American Express are co-owners of, said that without full interoperability "the customer can't use the technology to its full extent."

Mr. Yen and Mr. Kingdon agreed that interoperability is multilayered, far more complicated than just cross-compatibility between two types of cards.

More than once, Mr. Yen "reissued an invitation" to bring Maosco and the chief Multos advocates, MasterCard International and its 51%-owned Mondex venture, together to discuss commonalities with the Visa Open Platform and its Java programming basis. Mr. Kingdon never responded directly; Maosco officially invites competing brands to run on Multos and has American Express and Proton doing just that.

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As happened in Mr. Tyabji's speech, the panel discussion descended from lofty heights to more basic and potentially deflating questions, such as "Why do we need interoperability?"

Citibank vice president Miguel Abramowicz said it would foster economies of scale and "save us money in the long run. How practical is it today? I'm hoping it happens before I retire, but I'm not betting on it."

Jerome Svigals, a California-based consultant and critic of smart card progress, railed from the audience about the industry's tendency to "keep forming organizations" rather than investing the energies in the established procedures of the International Standards Organization. Mr. Svigals contended that ISO processes could dispel chip confusion just as it did in the magnetic stripe realm 20 years ago-overcoming early resistance from Citibank, MasterCard, and Visa, he pointed out.

Typical of the panelists, Mr. Yen leaned in favor of a de facto approach because an ISO result can take 10 to 20 years, too slow for a fast-moving technology.

Mr. Kingdon said "ISO committees can be very slow. We have to move as swiftly as Microsoft and be as inclusive as ISO-there is a tension there."

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