Though U.S. banks have not been on the fast track to smart cards, a few are climbing aboard some transportation industry initiatives.

First Union Corp., which showed its enthusiasm for smart cards in Visa's Atlanta Olympics trial in 1996, has teamed up with the Washington Metropolitan Area Transit Authority to issue a cobranded fare card with a chip.

In contrast to the stored value cards in Atlanta, which had to be inserted into card readers at turnstiles, the Washington Metro pilot will use faster and less-cumbersome contactless technology. First Union, which is based in Charlotte, N.C., plans to issue 1,000 cards for the pilot in the second quarter.

PNC Bank Corp. of Pittsburgh is participating in the Pennsylvania Turnpike Commission smart card pilot, scheduled to begin this month. The commission is starting by issuing 400 employee identification cards with chips for building access, the cafeteria, and vending machines.

The employees will get their own toll lanes with a contactless card system as part of the test.

Other banks have shown interest in such transportation applications, which were the subject of an Intelligent Transportation Society of America electronic payment systems workshop last week in Reston, Va.

In another sign of banks' growing interest, BankAmerica Corp. has joined Motorola Inc. and others in a bid to serve the San Francisco Bay Area Translink program, a joint automation project of 26 participating transit agencies.

Fleet Financial Group of Boston has chosen to get started with smart cards for parking meters.

These banks are looking for ways to build customer loyalty, and they see smart cards as useful in some very specific cases.

"If anyone is going to trick you and say there is no business case for stored value, they are dead wrong," said Michael G. Love, vice president of the consumer group at First Union. "You have to aggressively attack the niche markets."

It was clear at the Intelligent Transportation Society event that banks are perceived as uninterested in pushing technology envelopes.

"The private sector would pay a premium for our customers once we have demonstrated success, rather than participate in the development of a transportation smart card network and share ownership of our customers," said Jesse Samberg, vice president of finance at the New York Metropolitan Transportation Authority. "They are risk-averse."

Daniel M. Fleishman, principal at Multisystems, a consulting firm in Cambridge, Mass., said, "In some cases there has been some hostility" between the two camps. "The banks will be interested when they see the clear business case."

Fleet started its parking meter pilot out of the fear of losing one of its most important customers-the City of Boston. The city approached Fleet for help in letting drivers pay for parking without fishing for change, while eliminating a severe vandalism problem.

Cynthia Abbott, vice president and smart card product manager at Fleet, conceded it is "risk-averse" but "losing commercial deposits is also a risk we don't want to take."

Fleet was hesitant at first, but when the city said it would "solve these problems with or without you," the bank started looking for technology suppliers and teamed up with Setec Oy, a Finnish technology company, and POM Inc. a parking meter manufacturer in Russellville, Ark.

The pilot was a success, according to Fleet. One month after its start last October, the city's meter revenue increased 40%.

The program is to continue through June, and the bank plans to expand it to other parts of the city in the next few months. Fleet expects the city to request a proposal in April.

Ms. Abbott said she understands the banking industry's reluctance to enter this market.

"Other banks might not have the business case with a large government- customer base," she said, adding that "this year's technology might be totally different next year."

Mr. Love of First Union said teaming up with a transit authority can only help a bank's business.

He estimated that 45% to 75% of transit riders in a given city would be customers of the area's largest bank. Cross-selling experience indicates that offering them an additional product reduces their likelihood of attrition.

First Union will use its branch network and customer service representatives to sell its Washington Metro card. It is similar to previous transit passes but has the First Union brand along with the transit authority icon on the front.

The program name, Smartrip, will appear on the card as the acceptance mark at train and bus stations.

"The beauty of (the pilot) is you don't have to sell the concept of stored value to transit riders," Mr. Love said. "You just have to introduce the new technology."

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