First Union Corp. is taking smart cards to boot camp for a second time.
Together with the Treasury Department, First Union will distribute more than 22,000 Visa Cash cards to recruits at Fort Benning army base in Georgia over the next year.
Two years ago, the Charlotte, N.C., banking company started a similar program-at Fort Leonard Wood training base in Missouri-which recently was extended through 2000.
Gary Grippo, electronic money project manager at the Treasury, said he was pleased with the results of that first effort.
"We've studied the smart card technology in a geographically contained environment at Fort Leonard Wood and are impressed with the conveniences and cost-effectiveness it offers," Mr. Grippo said. "We again asked First Union to act as the issuing bank for this project because of their extensive expertise in implementing smart cards."
Michael G. Love, vice president of smart card technology at First Union, said the new program is basically identical to the one at Fort Leonard Wood.
The Treasury Department now has smart card programs running at five army installations. It started issuing the cards with NationsBank (now Bank of America) at Lackland Air Force Base in San Antonio last July.
The Fort Benning program, which started in February, has so far been well received by the Defense Department's finance and accounting services, which prepare and distribute the cards, Mr. Love said.
The Army-Air Force Exchange Service ensures daily settlement of the smart-card machines and services the merchant terminals.
"They had a high cost associated with cash distribution and the cards have reduced that cost," Mr. Love said. "It speeds up the distribution time so there is more time during that initial first day" when the recruits arrive.
The disposable cards come loaded with $200 and can be used at specially equipped merchants on the base, before direct payroll deposit accounts are established.
This program "continues to demonstrate the fact that if you find the right business problem to solve with smart cards, you can demonstrate the value of the product," Mr. Love said.
Though many bankers have given up on the likelihood that they can make money with simple stored-value card services, Mr. Love has urged the industry not to dismiss them out of hand.
The Fort Benning effort holds special interest for First Union because it has a bank branch on the base that caters to area residents and base personnel.
Though the $200 cards for recruits cannot be replenished with cash value, First Union is planning to offer reloadable smart cards to the branch customers, who will be able to use them at local merchants who are smart-card ready.
Besides having a computer chip, the reloadable cards have a magnetic stripe that allows the cardholder to draw funds to load onto the chip from a checking account through an automated teller machine.
Recruits will have the option of opening a military payroll account at First Union after their introductory smart cards run out, Mr. Love said.