The growing interest in smart cards for transportation purposes is spreading into parking.

Positive results from a parking meter test in Boston and imminent initiatives in major cities such as New York and Washington are raising hopes for mass acceptance of at least a single-purpose type of card with value stored in its computer chip.

These efforts are piquing the interest of other municipalities and universities. Some of them have already put smart cards to work in ways that indicate how banking and payment services might spread in the general marketplace as the technology evolves outside those areas.

Smart cards are "one of the hottest topics in the parking industry right now," said Duke Hanson, vice president of marketing and business development at Lockheed Martin and chairman of the International Parking Institute's electronic payment systems committee.

Bethesda, Md.-based Lockheed is managing 15,000 parking meters it installed recently in Washington. All are equipped with smart card slots- which for now are sealed shut.

The city has asked Lockheed to implement a smart card trial this year using about 1,500 of the meters. Lockheed is reviewing vendors and looking for partners to put multiple applications on the cards, taking advantage of the chip capacity that many observers say will be the key to deriving long- term profits.

New York City's parking bureau has also begun converting its 66,000 mechanical meters to electronic devices with smart card slots. So far about 25,000 meters have been supplied by Duncan Industries of Harrison, Ark., and J.J. MacKay Canada Ltd. in Nova Scotia.

Where practical for multiple parking spaces, New York City also uses smart-card-ready payment stations made by Schlumberger Smart Cards and Terminals, a global chip card and terminal supplier whose U.S. base is in San Jose, Calif. The New York rollout of smart card parking is expected to be announced later this year.

The city has thousands of Gemplus and Schlumberger smart cards in storage. Officials said they are taking their time to be sure that the marketing plan is ready and complete.

"We want to make this a seamless transition," one New York parking official said. "Since smart card pilots in the city didn't track very well, we need to make sure we have all of our i's dotted and t's crossed before we put it out there."

Dave P. Witts, marketing manager for municipality solutions at Schlumberger, said he has offered to help New York City with its distribution plans. Figuring out how and where to sell the cards has proven to be the most challenging aspect, a city official said.

In Schlumberger's other citywide smart card parking program, in Aspen, Colo., cards can be purchased at the town hall or by mail. Aspen's two- year-old program was the first application of multispace smart card parking in the United States.

Schlumberger has developed parking devices that accept all payment types. Its multispace stations are gaining popularity on campuses and in some cities, and have made major inroads in Europe.

At the University of California at Berkeley, students may buy a $50 card to use at multispace machines. The university gets the money up front and, in many cases, offers the purchasers discounts.

The prepaid cards so far come with magnetic stripes, not chips. Parking administrators, like bankers and others considering the next-generation technology, are hesitant to bear the conversion costs.

"One of the drawbacks is the initial cost, and where else can you use that smart card?" Mr. Witts said.

In Europe, many of the cities using Schlumberger equipment for parking have lowered costs by teaming up with phone companies to offer a multi- application card.

But in the United States, where smart cards are less widely accepted, the challenge of upgrading infrastructure is more daunting. And industries differ in the difficulties they face in taking the plunge - and their willingness to do so.

New York City is a case in point. Mr. Witts said he proposed a smart card with both transit and parking applications but found that the two managing agencies were "so big it was hard to get them together to share customers."

Though New York's Metropolitan Transportation Authority considered a fare collection system with smart cards, it ultimately adopted and successfully marketed a magnetic-stripe-based MetroCard.

Bureaucracies and other obstacles aside, Mr. Witts said he expects that smart card parking will "take off rapidly within the next calendar year, because the International Parking Institute is focusing efforts on it. They are a driving factor in parking."

The Fredericksburg, Va., trade organization is working with Schlumberger to publish a document, "The Guiding Principles for the Use of Smart Cards in Parking."

Some industry experts say smart card parking will not take off until more financial institutions become centrally involved.

"When you introduce a new form of technology that makes life easier, you are also creating new processes people are not familiar with," said Steven Landau, director of field marketing products and solutions for Gemplus, Schlumberger's French smart card rival.

"Until a bank or third party comes to the table to say it will deal with the issuing and management of the float and card issuance and distribution, parking authorities are not going to readily accept the technology-even though it's better," said Mr. Landau, who is based in Philadelphia.

Fleet Financial Group took its smart card parking flier in October after Boston, a major Fleet Bank client, asked for help. The city was looking for ways to combat severe vandalism while improving convenience for drivers by letting them pay without having to fish for change.

Fleet teamed up on the program with Setec Oy, a Finnish technology company, and POM Inc., a parking meter manufacturer in Russellville, Ark. In the first month of the pilot, the 224 meters produced 40% more revenue than those they replaced, according to the Boston-based bank.

"Parking is simple; the devices are rudimentary," said Cynthia Abbott, vice president and smart card product manager at Fleet. "You don't have complicated fare structures. We decided to take a small step first."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.