Tired of bemoaning the lags in smart card acceptance, technology companies are producing equipment that can connect the cards directly into computers and networks.

These card-reading devices come in various shapes and sizes, and range widely in complexity and cost. But hopes are unanimous among manufacturers and software providers that bankers, merchants, and consumers will soon come to see the added utility they bring by making smart cards easier to use in more and more places.

"The stored-value characteristic of a cash card doesn't seem to be picking up at the rate we initially thought," said Doug Braun, chief technology officer of the banking division of Intelidata Technologies Corp., one of the companies marketing a smart card-computer interface.

"Without getting the prices of readers and cards down, it's hard to get volume," he said. "And you can't get volume without getting the prices down."

Herndon, Va.-based Intelidata latched on to a technology developed by Fischer International Systems Corp. of Naples, Fla., called Smarty. The patented device looks like a 3.5-inch computer diskette, but has a smart card slot. Slipped into a personal computer's disk drive, it enables the PC to read or update what is on the card.

Intelidata packages Smarty under its own name, MoneyClip, which a home banking customer can use to check balances, transfer funds, pay bills, shop on the Internet, and even download cash onto the card's chip-assuming there are other chip-friendly places to spend it.

It may not be a perfect "hard-wiring" of chip cards with computers, but at a list price of $59.95 and no need for further modification, MoneyClip has the advantage of using what computer people call the installed base.

"There are over 200 million PCs with the capability to use a smart card reader like MoneyClip," said Michael Battaglia, president and CEO of Fischer International. "MoneyClip paves the way for consumers to use their PCs with a smart card to pay bills and safely shop on the Internet from home."

Fischer recently formed a joint venture with Toshiba Corp., called Smartdisk Corp., which is now the marketer of Smarty.

Since the product's launch in February 1997, said Paul Pieske, director of product marketing for Smartdisk, the company has been selling about 10,000 readers a month. One of the largest customers is Visa International, which has packaged Smarty with its platinum card in South America.

Smartdisk is also starting to do some work with Mondex International member banks. Smarty could help Mondex accelerate its linkage between physical-world electronic cash and on-line commerce.

"A major application in the United States is network security and access control," said Mr. Pieske. The most frequent uses are to get into a PC by using Smarty and a smart card, and to authorize access to portions of a network and/or applications.

Smartdisk is working with Vasco Data Security of Oakbrook Terrace, Ill., a provider of authentication tokens called Digipass. It has sold more than two million of these for Internet banking, access control, and corporate network security.

"Based on Vasco's experience providing data security to more than 100 banks and other financial institutions around the world, we found that we always have to consider how technology can best solve their business challenges first," said John Haggard, chief technology officer. "Because our smart card and token solutions help protect data transfer and transactional services, there are a number of ways we can fit into secure remote banking. It's not one size fits all."

Mr. Haggard said a comprehensive smart card infrastructure is still a long way off-even in places in Europe that are far ahead of the United States.

"It will be some years before it reaches critical mass in Europe and even longer before the same happens in the United States," he said. In the meantime, smart cards will be used mainly in specialized applications like secure cash management.

Indeed, Intelidata is targeting MoneyClip at banks' corporate treasury departments for balance reporting and wire transfers, and for intranet security. Twelve banks have implemented MoneyClip on their intranets.

"We're struggling to put a premium program together to entice consumers to use it," said Mr. Braun. "We haven't been able to crack that market yet. I reckon MoneyClip will continue to be niche-marketed as an ID card before we see stored value take off."

Meanwhile, smart card systems companies such as Gemplus and Schlumberger are emphasizing Internet payment capabilities, with the cards serving as authentication instruments, said Cynthia Weaver, an analyst at Tower Group, Newton, Mass.

The challenge was taken up in 1996 by Hewlett-Packard Co., Microsoft Corp., and Schlumberger, organizers of the PC/SC Work group, dedicated to standardizing smart card equipment for personal computer input.

Members of the work group now include Bull, Gemplus, International Business Machines Corp., Siemens Nixdorf, Sun Microsystems, Toshiba, and Verifone. The coexistence of competitors indicates some shared sense of urgency.

The Open Card consortium is another group developing a smart card standard for slimmed-down network computers like those advocated by Sun and Oracle Corp. The PC/SC and Open Card groups are working on a convergence of their specifications.

"Essentially every application vendor had to choose a reader and card and write to that," said Karan Khanna, Microsoft's product manager for the Windows NT security group. "The goal of the work group is to work with leading vendors to publish an open set of specifications so that any vendor can write to them."

Version 1.0 of the PC/SC spec was released three months ago and Microsoft has incorporated it in its Windows platform. Version 2.0 is targeted for yearend. The Microsoft browser, Internet Explorer, is also "smart card enabled," and the operating system Windows NT 5.0 will be adding smart card support by the end of the first quarter of 1999, Mr. Khanna said.

He said vendors tend to be working on smart card services for businesses rather than consumers. "These will slowly remove the barriers to smart card adoption. Definitely smart cards are the way to go," said Mr. Khanna.

Hewlett-Packard is offering a smart card keyboard as an accessory to the HP Brio system for small businesses.

"The market for smart cards is still in its early days," said Rod Bark, e-commerce program manager for HP's small-business computing operations in Grenoble, France. "We approach it on a project-by-project basis. The keyboard on its own doesn't make much sense, but we're working with our subsidiary Verifone to provide the right software solution."

This may include incorporating a smart card reader with Verifone's vWallet for Internet purchases. Verifone, meanwhile, is promoting Personal ATM, a hand-size chip-card-reading device that connects directly into a phone jack.

"I think all pieces will have to come together for a full-scale e- commerce pilot," said Mr. Bark. That would involve financial institutions, telecom companies, and merchants. "This is difficult to get in place and that's the reason e-commerce has taken so long to materialize," he stated.

HP is trying to interest financial institutions in Europe in some smart card pilots. France seems like fertile ground, with its 25 million smart bank cards already deployed.

Government-sponsored commerce projects in Singapore, Malaysia, and China could also give the technology a boost. And people impatient with SET, the credit card industry's Secure Electronic Transactions standard for the Internet, are eagerly awaiting version 2.0, which is likely to accommodate smart-card-based authentication, which in turn would allow customers to shop from any computer, not just their own.

Siemens Nixdorf has already integrated smart card readers into its high- end PCs. "Our intention is to deliver chips to card manufacturers to keep (encryption) keys in integrated circuits so you can use public key cryptography for secure access or messaging for open networks," said Yoerg Borchert, a vice president of Siemens Microelectronics in Santa Clara, Calif.

Siemens Microelectronics supplies 40% of the chip card integrated circuits worldwide. "Our perspective for the United States is that e- commerce is the important application and financial services is one of the most important aspects," said Mr. Borchert.

Unlike Europe, where many ATMs are equipped to read the cards, he sees PCs as a more likely chip-card entry point for North America.

"The penetration of PCs here in the home is much higher than in Europe," stated Mr. Borchert, a German native. "Mexico is going ahead with banking and prepaid phone cards, and Canada is moving ahead with prepaid phone cards and value-enhanced applications."

"When smart cards take off in the United States, they will be multifunctional and will probably start in closed systems (like mass transit) and as loyalty cards in retail outlets, which will demand inter- operability," said Ms. Weaver of Tower Group.

But she does not see even an application like Smarty becoming a mass- market item until about 2002.

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