When the market for smart cards finally takes off and among industry people it has become more a question of when than if few will be as relieved and gratified as Dan A. Cunningham.

Mr. Cunningham has spent 10 years trying to sell the advanced card technology in the United States, suffering through fits and starts and growing pains that pushed many of his peers into other lines of work.

"If you look around this industry in general, very few have been around that long," Mr. Cunningham said during a recent moment of reflection.

He has precious few of those -- a sure sign, he is convinced, of the coming explosion of plastic cards enhanced with computerized intelligence and memories, in the form of silicon chips.

About 15 months ago, Mr. Curiningham, 52, became president and chief executive of Gemplus Card International, from which he expects to have an ideal view of the coming boom.

The Gaithersburg, Md., company is the U.S. outpost of the Gemplus Group of Gemenos, France. The six-year-old organization has grown rapidly to claim the No. 1 market share in Europe, the most active smart card region in the world.

On its heels are two other French corporations -- Bull, which claims to be the No. 1 supplier to banks, and Schlumberger. They and Gemplus seized world leadership after France adopted a national policy to support chip cards, among other emerging technologies. The French banking induslry embraced the chip standard, completed the conversion last year of 22 million cards, and reported the virtual elimination of most types of credit card fraud.

Bankers elsewhere, especially those in the U.S. who are influential in the MasterCard and Visa associations, were slower to commit. But over the last year, MasterCard, Visa, and MasterCard's European affiliate Europay have formally endorsed the technology and are nearing completion of a joint effort to set basic technical standards.

The card manufacturers and vendors of transaction processing equipment say this technical baseline is essential if they are to meet the coming demand.

Meanwhile, MasterCard and Visa are working separately on completing approaches to storedvalue and electronic purse cards -- in MasterCard's case with the explicit goal of modifying its global infrastructure to handle chip cards, in addition to existing magnetic-stripe cards, by 2000.

Gemplus, in part through a joim venture with Verifone Inc., the Califorma-based manufacturer of point of sale systems, consults closely with both card associations and is a member of Visa's working group.

Gemplus also has a close working relationship with Electronic Payment Services Inc., another member of the Visa team and the owner of the MAC automated teller machine network, which is planning to test the electronic purse concept next year in its home state of Delaware.

Given Gemplus' size and influence, and his own experience that includes eight years with Bull's U.S. chip card subsidiary, Mr. Cunningham has become an industry leader and spokesman.

He is a director of both the Smart Card Industry Association and the Smart Card Forum. The latter is a multi-industry advocacy group organized last year by Citicorp and counting almost all of the 10 largest U.S. banks among its more than 130 members.

Mr. Cunningham's Gemplus colleague, executive vice president and company co-founder Gilles Lisimaque, is co-chairman of the Smart Card Forum's technology working group.

"My view of the [U.S.] banking industry has changed dramatically over the last year," said Mr. Cunningham, who worked with bankers at Recognition Equipmere and NCR before moving into smart cards.

"We have Chemical, Citibank, Bank of America, NationsBank, and Wells Fargo on the [Smart Card Forum] board. Chase is very active, and First Union just joined," he said. "Their active role and the availability of standards make banks one of the major contenders to be the first mass issuers of smart cards in North America?"

But the banks' and related entities' growing interest and activity may be only the tip of an iceberg, based on Gemplus' performance and what Mr. Cunningham sees from his industry leadership perch.

"This year we are going to make about 150 million smart cards," Mr. Cunningham said of Gemplus. "Last year we made about 103 million of the 310 million worldwide.

"In August this year the month that is supposed to be a vacation in France we produced 15.5 million cards, and by yearend we expect to have our [monthly] capacity up to 20 million?"

The company, and the industry as a whole, is also seeing momentum build among telephone companies, which some observers believe are capable of establishing a new payment service, ahead of the banks, that replaces cash.

"The U.S. will be led into chip [cards] by one of these two industries, banking or telecommtmications," Mr. Cunningham said.

"It's really up for grabs; 1995 will be a start-up year for both industries, and we'll see significant quantities in 1996."

Mr. Cunningham points to telephone companies in the Bahamas and Bermuda that are issuing stored-value telephone cards in the hundreds of thousands. Among the many U.S. telecommuniealions groups marketing prepaid card services, U S West recently became the first to test a chip-based card, with an initial issue of 140,000 units from Gemplus.

Gemplus also has worked on an electronic payment system for parking meters at a mass transit station in the Washington area, and on a laundromat system installed by a Maytag distributor in Florida that uses smart cards in place of coins.

Mr. Cunningham said the laundromat system was implemented in apartment complexes up and down the socioeconomic ladder and has met universal approval indicating, he says, the marketing power of the stored-value concept.

He insists there are enough such programs in the planning stages to ensure the long-awaited explosion in smart cards, but he is. under contractual constraints to keep them confidential.

"We think the gaming industry could come on very fast with chip cards," Mr. Cunningham said. "It could be even bigger than phone cards."

In his tone there is still an element of hopefulness. Some chip card projects have not come to fruition as quickly as he had hoped, but the Gemplus Group has little to complain about.

Total sales have been climbing 50% a year, and Mr. Cunningham has seen the U.S. affiliate more than double in size since he joined as a middle manager in April 1992, though it is still at a relatively modest 12 people.

Gemplus' monthly manufacturing capacity most of its cards are produced in France. and demand on this side of the Atlantic is not quite sufficient to justify a local plant -- has climbed an average 73% over the last four years.

"What we are seeing in this card industry is similar to what happened with the personal computer -- more functionality for lower cost," Mr. Cunningham said.

Unit costs for high-volume chip card production are falling below the $1 threshold, making them competitive with magnetic stripe cards. With anticipated technological advances "we could go farther in the next two to four years than in the past 10," Mr. Cunningham added.

The economics and perceived market opportunities have created a crowded market. France's big three and their chip suppliers are running up against worldclass technology players like Hitachi and Toshiba from Japan, Philips and Siemens from Europe, and AT&T from the U.S., with its competing "contactless" technology that does not require the traditional type of transaction terminal.

Gemplus is an upstart relative to Bull, Schlumberger, and Philips. The smart-card specialist was not launched until 1988, about a decade and a half after Frenchman Roland Moreno obtained the earliest chip-in-card patents. (German and Japanese scientists have some rival claims on the invention, but the French clearly took the manufacturing lead.)

Marc Lassus. Gemplus' chairman, is hailed inside and outside the company as its guiding visionary. He currently presides over a work force of 1,100 and a presence in 15 countries.

"He's the guy who put Gemplus together," said Mr. Cunningham. who has been reporting to Mr. Lassus since July 1992. Only three months earlier, Mr. Cunningham joined Gemplus from Microcard Technologies Inc., the Bull subsidiary in Dallas that played a key role in a MasterCard pilot and other early, often costly but instructive chip card experiments.

"We all believed the smart card had a lot of potential. but we also knew it would take 10 years of perseverance to see it mature," said Paul Wittfeld, who worked with Mr. Cunningham at Microcard in the early years.

"Each of us reached a point of deciding whether to stay with it or move on to something else, and Dan was one who believed in the technology enough to stay with it at Microcard. and later Gemplus," Mr. Wittfeld said.

After Joseph Schuler resigned as president of Gemplus U.S. unit to become a consultant, Mr. Cunningham became acting chief executive officer. By August 1993, Mr. Lassus made the title official, rewarding Mr. Cunningham for having been "the driving force behind the significant expansion of Gemplus' U.S. operation in 1992 and 1993."

Mr. Lassus led a group of engineers, most with ties to the French electronics company and chip maker SGS-Thomson, who saw a market opening for some innovative card production techniques.

Among his breakthroughs was a molding technique that signiftcanfly lowered the cost of chip cards l produced for the French teleplione company.

Mr. Lassus also made some smart bets on research and development and production capacity. The company appears to be hitting the monthly benchmark of 20 million just in time for the demand, and it has been careful not to commit to an American factory before the time is right.

"Our manufacturing is modular," Mr. Cunningham said. "We will set up in a market when it is big enough, and we should be reaching that point very quickly in North America;' which could pose a challenge to Microcard and conventional plastics makers like DataCard and Malco, among others.

Among others coveting the U.S. market are two German companies: Giesecke & Devrient has set up shop in Reston, Va., and Orga Card Systems has established a beachhead by taking over ADE Applied Digital Electronics of Paoli, Pa.

Both companies are strong in the European prepaid phone card market and in cards associated with the burgeoning wireless communications networks. Indeed, Mr. Lassus, in a speech to the Smart Card Forum last spring, pointed to a projected 16 million U.S. mobile-cellular subscribers by 2000, saying they will need the access, authentication, and payment security that a chip card can ensure.

Because of their familiarity with the GSM technical standard -- Global System for Mobile communications European card companies are jockeying for position in the United States, and that can only accelerate the chip market's growth.

"I have said that this would be a billion-card industry, in terms of chip cards worldwide, by 2000, but that is conservative," Mr. Cunningham said. "If we keep up the current rate of 40% to 50% a year, we'll get there by 1996 or 1997."

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