A Russian technology company is attempting to implement a smart card system in the United States.
The Center of Financial Technologies wants to expand its open smart card system, Zolotaya Korona, or Golden Crown, so that Russian travelers here can access funds stored on their smart cards.
The company, which recently opened an office in Chicago, also wants to offer closed smart card systems to universities, health clubs, and other businesses that might be interested.
While a multitude of U.S. technology firms are experienced in developing smart card programs for universities, such as Griffin Technology Inc. and Harco Inc., the center will sell its products at a lower price, said Tatyana Nesterova, a spokeswoman. She explained that the lower cost of labor in Russia gives the company an advantage.
The Golden Crown project, an interregional smart card system established in April 1994, serves 35,000 Russians in 25 cities with more than 100 bank participants, including three banks in Germany, said Ms. Nesterova.
The center provides issuing banks and accepting merchants equipment, training, software, and maintenance. Terminals are manufactured by Verifone Inc., Innovatron, and DataCard Corp. Chip cards are manufactured by Solaic of France.
Consumers can use their cards in department stores, bakeries, grocery stores, drug stores, and other retailers in several Russian cities, including Moscow, St. Petersburg, Omsk, and Vladivostok.
But unlike other trials, the cards are not used for vending machines, transportation, and small-change purchases.
Ms. Nesterova said the center will entice U.S. banks to participate by offering a 1% transaction fee, as well as the lure of funds on deposit as a hedge against withdrawals.
Even so, Joseph Schuler, principal of the Schuler Consultancy, a smart card consulting firm in Minneapolis, said he would be "real surprised" if the venture is successful. He pointed out that banks are already working with Visa and MasterCard to initiate smart card projects.
"I'd say go home, or partner with American groups that have experience dealing with American banks, or with Visa or MasterCard," he said.
Ms. Nesterova said the center is trying to establish relationships with the two associations. Rather than competing, she said, "we just want to provide a service for Russians and a little source of revenue for the American banks."
Mr. Schuler noted that an outside company would have a difficult time cracking the college market because of all the players already targeting and establishing programs in that arena.
But Tony Ryanczak, senior vice president of sales and marketing for Griffin Technology, said smart cards are just emerging on campuses. "We have been growing the business using magnetic stripe technology."
He said several campuses are in the process of initiating smart card programs. Large corporations are breaking into the business through acquisitions: AT&T purchased Harco, and American Express purchased Special Teams Inc., another campus specialist.
Mr. Ryanczak said if the Russian contingent has "solid technology and price advantage, they may be in at the right time."
