Smart cards and electronic money have barely begun to make their mark, but they already have some deep thinkers waxing philosophical.

Witness the Cardtech/Securtech program last week in Atlanta, where thousands of visitors could avoid the physical exertions required to traverse the vast technology exhibition by engaging in some intellectual exercise.

Leading the pundit list was Alvin Toffler, the popular futurist and author of such books as "Future Shock," "The Third Wave," and "Powershift."

What does money have to do with all that? Enough for a 90-minute lecture, followed by some repartee between Mr. Toffler and his wife and frequent collaborator, Heidi - an act that can claim the speaker of the House, Newt Gingrich, as its No. 1 fan.

"What you are doing can change the world," Mr. Toffler told more than 1,500 people at his keynote session. But he warned them that "revolutions often eat their young - just ask Mikhail Gorbachev."

Money innovators are just doing what they have to do to move from the industrial society of Mr. Toffler's second wave to the information-based third wave.

Each of the waves "developed its own forms of communications media, notions of privacy, and money," Mr. Toffler said. "The money, information, and knowledge systems for second-wave society are too limited and expensive to work in a third-wave economy."

He spent a lot of time on the notion of "de-massification," the fragmenting of institutions and markets that has been manifest in the decline of mass-political ideology and the proliferation of lifestyles and consumer behaviors.

"A de-massification of society needs more types of money," Mr. Toffler said.

He brainstormed a few examples: A "card for kids" with parental controls comparable to the V-chip for televisions; a "workfare card," along the lines of electronic benefits transfer systems for welfare recipients; and a card for disbursements of educational vouchers.


Mr. Toffler and Martin Mayer, who is currently working on an update of his 1974 book "The Bankers," focused on the costs and burdens of what Mr. Toffler calls second-wave money.

Mr. Toffler said the costs of printing, distributing, and processing money - estimated at a couple of percentage points of gross domestic product - are an "invisible drag on the economy" and "a hidden tax" on capital.

Meanwhile, the U.S. government earns some $20 billion a year in seigniorage, a profit on the issuance of coins and currency. Since that might be threatened by "third-wave money," the director of the U.S. Mint has raised the possibility of its issuing stored-value cards, perhaps one more example of de-massified money.

"Enormous amounts of machinery that can be used for payments purposes are coming on-line in a whole bunch of places where the Federal Reserve doesn't know what's going on," said Mr. Mayer, a guest scholar at the Brookings Institution in Washington. "The economies available from moving to electronics are so large that people thwarted by the Fed will find ways to get around it."

"The argument for privatizing the payment system - getting the retail payment system away from the Fed - is overwhelming," Mr. Mayer added. The central bank is "encouraging its own debilities" by promoting interstate banking, ensuring that its interbank check-clearing role will diminish.

Recalling that he wrote about smart cards in Fortune magazine in 1983, Mr. Mayer said he is convinced "something is going to happen this time."

Noting the growing acceptance of stored-value and electronic purse cards in Europe, he added, "It's a bonanza for the banks. They should have been pushing for stored-value cards and designing their ATMs to handle them."


"With the smart card and stored-value concept, you are at the cusp of the final chapter of money as a financial asset in global commerce," said Jeffrey Ritter, head of a research program called Eclips - Electronic Commerce, Law, and Information Policy Strategies - at Ohio State University.

Mr. Ritter, a lawyer promoting self-regulatory approaches to electronic commerce, said, "We still use the words and nomenclature of local currency," but most of its historical and physical attributes have gone digital.

Even though no government has yet authorized digital currency, he said money has evolved into "digital assets traded for hypothetical value on exchanges, in the form of derivatives, and on the black market." But laws have not caught up.


On the tension between ease of access and data security, Mr. Mayer said he favors privacy, but "it would be lunatic to deprive law enforcement of tools that are useful in tracking mob money."

William Baity, assistant director of the Treasury Department's Financial Crimes Enforcement Network, also argued "there must be a balancing act" between privacy rights and official accessibility.

"What does this (technology) do to notions of trust?" said Mr. Toffler. "The technologies for deception are in a race with the technologies of verification."

"Never underestimate the bad guys," Mr. Ritter said. "They are significant, serious, and you are their target. Whatever you develop, they will be out to break it."


Elsewhere, suppliers of chip cards were out in force. Groupe Bull, which announced a business alliance with NBS Technologies of Canada, jostled for position with Schlumberger and Gemplus, French rivals that acquired U.S. manufacturing capability during the last two years.

Bull, Siemens of Germany, and GPT of Britain, among others, touted smart cards usable in both conventional terminals and the "contactless" kind. Motorola Inc. said it will be the first to manufacture chips for cards on U.S. soil - at a North Carolina plant.

Visa had its stored-value system on display and operating around town - well ahead of the Olympics start date.

Mondex said its Swindon, England, test has put it "on course for 2.5 million customers" - a somewhat crude extrapolation but a declaration of optimism nonetheless.

Yet the market is still perceived as being formative at best.

"If you say there is no business case for smart cards, you are right," said Catherine Allen, former chairman of the Smart Card Forum, now head of the Santa Fe Group. "Smart cards are an enabling technology. Each application - stored-value, electronic purse, loyalty, etc. - should have a business case attached to it."

Unconcerned about business cases, the newspaper columnist Dave Barry toured the exhibits in preparation for his banquet speech. He was awestruck by a device that registered his fingerprint.

"Thirty seconds later I went back, stuck my finger in, and the machine told me that was me," Mr. Barry said. "Wow. That's something I really needed to know."

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