BankAmerica Corp. and Visa International are beginning an experiment in loading Visa Cash smart cards with funds via the Internet.

Several hundred BankAmerica and Visa employees are to begin participating this month in an upgrade to Bank of America's home banking service.

They would be able to transfer cash from checking accounts to the smart cards using a Smarty, a device that enables the card to be inserted and updated in a personal computer's floppy disk drive.

Once stored in the card's chip, funds could be spent at vending machines in company offices or at certain points of sale.

Five Internet merchants are in on the pilot and can get paid in virtual cash from home PCs. (Some of these have physical stores but they are not yet equipped for Visa Cash.)

The pilot is an extension of other BankAmerica-Visa efforts showcasing chip capabilities. The San Francisco bank has been issuing stored value cards for use at Visa headquarters in suburban Foster City.

The companies also implemented a multiple-application card system at a downtown San Francisco BankAmerica building, and have done limited testing of Internet commerce with smart cards since May 1997.

BankAmerica has had a smart card group in its interactive banking division researching and testing chip technologies for about four years.

It rolled out its first client application this past spring-a data encryption and authentication program for users of the Wanda corporate cash management service.

As in the Internet cash pilot, the Wanda smart cards are delivered with a BankAmerica-branded, diskette-size Smarty reader produced by SmartDisk Corp. of Naples, Fla. The chip card is inserted in the Smarty, which in turn goes into the PC drive for processing.

The cash pilot aims to "establish the platform for what will one day become the ultimate convenience-a personal, home automated teller machine," said Michael DeVico, executive vice president of BankAmerica's interactive banking division.

He pointed out that the connection could be made via numerous channels, including interactive television-a medium BankAmerica has directly invested in.

BankAmerica, soon to merge with NationsBank Corp., formed a joint venture in that field earlier this year with Tele-Communications Inc., Intuit Inc., and Home Network.

"Home ATM" imagery has been frequently invoked as banks and their system vendors try to spark interest in advanced card technology.

In a New York City smart card trial, Citibank distributed Verifone Inc.'s Personal ATMs, hand-held terminals that link Visa Cash cards to bank accounts. Remote cash loading is part of the design of MasterCard's competing Mondex system.

To load funds on a Visa Cash card, a user would log on to BankAmerica's Web site and go to a designated area for smart-card-based funds transfers.

The user would then follow the command to insert the card in the PC.

Spyrus provided the software for transferring value to the cards' chips. (For more on Spyrus, see article below.)

Bette Wasserman, vice president and smart card program manager for BankAmerica, said "the widespread reach, easy access, and cost savings" will eventually attract consumers and financial institutions to on-line commerce.

The combination of the Internet and chip cards "will eliminate much of the initial need for expensive equipment upgrades in the physical world and help lead to increased acceptance of the cards in both on-line and physical environments," Ms. Wasserman said.

Acknowledging that marketing and education will be critical to getting the idea across, she added, "It's a no-brainer. People won't have to go out and find an ATM."

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